It’s a tough time to be a banker at Deutsche Bank.
The German banking behemoth has nurtured a corporate culture built on chicanery and corruption for years and indeed, it’s managed to stand out in that regard even in a world where the vast majority of large financial institutions have been variously exposed for manipulating everything from FX to benchmark rates as well as engaging in all manner of other deplorable business practices designed to enrich the firm at the expense of, well.
.. at the expense of everyone else in the world.In short, you have to try pretty hard to stand out as being particularly nefarious in the universe of TBTF institutions, but Deutsche Bank has indeed succeeded.
The above is one reason why co-CEOs Anshu Jain and Jürgen Fitschen were effectively shown the door back in June and over the course of 2015, the company lost several other high profile bankers including the global head commercial real estate and the head of structured finance.
New CEO John Cryan has now embarked on a frantic attempt to right the ship, and that effort recently manifested itself in the dismissal of some 23,000 people, or around a quarter of the bank’s employees.
Next, Deutsche announced a raft of high-level management changes as part of an anticipated and sweeping restructuring of key divisions and senior-level committees.
As WSJ reported, Colin Fan, the investment-banking co-head responsible for securities trading, resigned and Michele Faissola, the head of the bank’s asset and wealth-management business, left too. Deutsche also split its investment bank into two pieces: one, the underwriting and advisory part, focused on mergers and other deals, corporate finance and transaction banking services such as cash management, and the other on trading and global markets.
As we noted last week, “while not as profound as imposing an internal Glass-Steagall wall, or creating a "bad bank" (at least not yet), this may be the first step to much more dramatic org chart overhauls, some which will likely end up in splitting off depositor assets from risk-trading activity.”
In the latest news out of the bank which has over €50 trillion in notional derivatives exposure, Cryan will slash bonuses by a third, or more than half a billion. Here’s Bloomberg:
Deutsche Bank AG may cut the bonus pool for its investment bank by as much as 500 million euros ($566 million), or almost a third, as co-Chief Executive Officer John Cryan seeks to slash costs in the securities unit, according to people with knowledge of the matter.
No decision has been taken and the biggest reductions are likely to impact employees in the fixed-income business, said one of the people, who asked not to be named as the information isn’t public. Some managing directors may have their entire bonus scrapped, according to the person. Deutsche Bank paid staff at the securities unit 1.7 billion euros of variable compensation for 2014, the Frankfurt-based firm’s filings show.
Cryan, 54, who took over from Anshu Jain in July, indicated earlier this month that bonuses may be cut after saying the company will report a third-quarter loss of about 6.2 billion euros after writing down the value of the investment bank and other assets. The bank is also considering suspending its dividend for the first time since Germany’s post World War II reconstruction in an effort to bolster capital.
Deutsche Bank paid staff across its businesses 2.71 billion euros in bonuses for last year, down from 3.16 billion euros they received for 2013, company filings show. Last year marked the first time the bank implemented European Union rules which cap bonuses at twice annual salary.
The investment banking and trading unit, which was previously co-headed by Colin Fan, employed 25,843 people at the end of December, 8,207 of whom were classified as front office staff, who are generally the top earners, according to company filings.
A total of 2,057 so-called material risk-takers at the investment bank, including 58 in management, were paid 1.09 billion euros in bonuses and other discretionary remuneration for last year, the filings show.
So yeah, it's a bad time to be a fixed income trader and an even worse time to be a fixed income trader at Deutsche Bank.
What's the world coming to when "material risk-takers" can't walk away with billions in "well deserved" cash for embedding enormous amounts of systemic risk in markets?
