Deutsche Bank U.S. Employees Said to Get Major Share of Bonuses

(Bloomberg) -- Deutsche Bank AG employees in the U.S. received the lion’s share of bonuses, according to a person familiar with the matter, as the lender cut its pool to drive down costs.

The amount set aside for 2018 fell to 1.9 billion euros ($2.2 billion) from 2.2 billion euros a year earlier, the lender said in its annual report. The investment bank division saw the biggest reductions, with a decline to 1.2 billion euros from 1.4 billion euros last year including severance pay.

Deutsche Bank’s bonus pool has been declining almost without interruption since at least 2010 as it seeks to lower expenses and comply with stringent European Union rules on executive pay. Chief Executive Officer Christian Sewing last year cut thousands of jobs, many of them in the investment bank, reducing the number of eligible bankers and seeking to reward top performers.

Deutsche Bank’s workforce shrank by 6 percent compared with a bonus pool cut of 14 percent. The U.S. reduction was particularly steep amid heavy cuts in the investment bank, with employees falling 11.3 percent to 9,253.

Deutsche Bank’s management board received bonuses for the first time since 2014, and it was the first payout ever in their current roles for eight of the nine members. Chief Risk Officer Stuart Lewis is the only board member who was in the same position when former CEO John Cryan’s team decided to waive their bonuses each year between 2015 and 2017.

The highest earning member of the management board is investment bank head Garth Ritchie, who received a “functional allowance” of 3 million euros on top of his fixed and variable pay, resulting in total compensation of 8.6 million euros. CEO Sewing got 7 million euros.

Deep as the cuts are, Deutsche Bank’s bonus reduction isn’t the biggest among European banks. ING Group NV recently slashed variable pay at the group by a quarter after it faced a money-laundering scandal last year.

Deutsche Bank AG pledged to reverse years of declining revenue while cautioning that the market environment so far is weaker than it had anticipated. Revenue in 2019 should be “slightly” higher than last year, assuming “solid” economic growth, the Frankfurt-based lender wrote in its annual report Friday. The bank maintained a profitability target for this year but said that goal remains dependent on how markets develop.

Deutsche bank granted a total of 26.5 million euros in severance pay and compensation for non-compete clauses to the management board members who left last year. Ex-CEO John Cryan alone was granted 9.9 million euros.

Employees received notification about their individual bonuses in early March, with many facing deep cuts and some getting nothing, people familiar with the matter have said. Others saw their variable pay rise, however, as the bank makes more selective payouts in an attempt to keep top earners, the people have said.

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