Deutsche Bank executives left after Bonuses slashed

Deutsche Bank has lost several senior employees after paying out employee bonuses last month. Earlier this year, the bank cut its 2016 bonus pool by nearly 80%.

According to Bloomberg, at least three executives have left the bank’s trading unit in Asia, two of whom have reportedly taken jobs at competitor Credit Suisse. Europe's largest investment bank in January scrapped bonuses of its top executives and slashed variable pay for other senior employees as chief executive John Cryan seeks to rebuild capital buffers eroded by misconduct fines.

The lack of clarity on compensation may make it harder for the bank to retain talent, and the extent of the impact will probably become visible this month, according to people close to the bank. This year's bonus cut was the deepest in the bank's recent history and came after two straight years of losses.

To make sure key employees do not leave, Deutsche Bank granted so-called retention awards worth roughly €1.1 billion to about 5.000 critical employees vesting over a period of up to six years. Previously, Deutsche Bank announced it would look to cut 9.000 jobs, including 17% of its equities staff and 6% of its fixed income staff as well as shutting down other operations or selling off arms of the firm.

On the other hand, while many banks are implementing cost cutting measures including layoffs and lower compensation, Credit Suisse set itself apart by increasing its 2016 bonus pool by 6%.

In its annual report released last month Credit Suisse stated the decision to increase bonuses came from a talent retention perspective and that “differentiated approach to determining compensation” was needed to remain competitive. The bank recently announced it will cut up to 6,500 job this year after it reported a US$2.43 billion net loss for 2016.
In last days, Glass Lewis advised shareholders to reject the bank’s proposal to pay 26 million Swiss francs in short-term bonuses to its executive board.