Deutsche Bank is withholding several million euros in bonuses from its co-chief executives and other current and former top managers as it seeks to hold senior staff responsible for a host of costly legal and regulatory problems.
Anshu Jain and Jürgen Fitschen are among the executives who will not be paid this year’s instalment of bonuses awarded for their performance in 2011, two people close to the situation said.
The move stems from a decision by the German lender’s supervisory board this summer amid mounting legal bills for past misconduct. “This is the supervisory board demonstrating it is holding people to account. But it is a precautionary measure, not a sign of wrongdoing on management’s part,” one of the people said.
Deutsche is involved in at least a thousand legal disputes including high-profile investigations into the alleged rigging of financial benchmarks including Libor and a crucial foreign exchange fix.
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The bank had to pay €3bn in legal costs last year and it stocked up its reserves for litigation and regulatory fines by €450m to €2.2bn in the second quarter of this year.
Mr Jain and Mr Fitschen have vowed to change the lender’s culture, seeking to overhaul its image and leave behind legacy legal problems.
The bonuses relate to a period before they took over as co-chief-executives in June 2012. The other current executives affected are Rainer Neske, head of private and business clients, and Stefan Krause, chief financial officer.
The former top managers affected by the mover were on the board in 2011. They are Josef Ackermann, the previous chief executive who left two years ago, Hugo Baenziger and Hermann-Josef Lamberti.
Deutsche granted its seven-member management board a total of €17.2m in bonuses for 2011 that were to be paid out over the course of several years.
It is unclear how much of that is being withheld but people close to the situation said a total sum of several million euros is not being paid out.
Deutsche’s supervisory board, headed by Paul Achleitner, will scrutinise progress on the bank’s many legal matters on an annual basis, in order to gauge whether to pay the withheld bonuses out at a later stage or not. The board’s move – first reported by Handelsblatt – highlights the impact of a stricter regulatory regime where banks need to withhold or cancel bonuses in case of wrongdoing.
Several banks, including Barclays, Lloyds Banking Group, Royal Bank of Scotland and UBS, have recouped bonuses in the wake of legal settlements over their involvement in the Libor rate-rigging scandal.
Lloyds this week became the latest bank to force eight former employees to forfeit £3m of their bonuses after finding that they had attempted to manipulate benchmark interest rates between 2006 and 2009.