Deutsche Bank AG cut its bonus pool for 2016 by almost 80 percent, Frankfurter Allgemeine Sonntagszeitung reported, a figure unmatched in the bank’s recent history as it tries to counteract the impact of low interest rates and legal expenses.

Germany’s largest lender is reducing the payments with an eye toward shareholders and is aware it will be “frustrating” for employees, Chief Administrative Officer Karl von Rohr told the German Sunday newspaper. The measures will affect about a quarter of the 100,000 staff. Some workers in key positions -- about 5,000 in all -- will get a special long-term incentive tied to the bank’s performance and paid out after as long as six years, von Rohr said.

Though Deutsche Bank told employees last month that bonuses would be reduced, the full magnitude of the cuts hadn’t been reported. The German bank saw its shares sink 23 percent last year amid rising court costs and concerns about its capital adequacy. In an effort to boost profitability and build a capital buffer, Chief Executive Officer John Cryan has eliminated jobs, suspended dividends and auctioned off risky assets.

The lender last year cut bonuses 17 percent, arguing at the time that deeper reductions would compromise its ability to hold on to top talent. The 2016 cuts outpace those of competitors. Royal Bank of Scotland Group Plc trimmed its bonus pool by 8 percent, while Barclays Plc cut awards for “front-office” staff by about 1 percent.

Source:
courtesy of BLOOMBERG

by Naomi Kresge

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