In the future, individual performance should be more rewarding for non-tariff employees of the bank.
(Photo: dpa)
Frankfurt Deutsche Bank wants to give more weight to the individual performance of its employees when determining variable remuneration. The institute has therefore developed a new bonus system that will have an impact on payments in 2024 for the first time. The Handelsblatt found out from financial circles, first “Finanz-szene” reported about it.
The new rules basically affect all non-tariff paid employees from the level of managing directors, i.e. also directors and vice presidents. This means: These regulations do not apply to employees subject to collective bargaining agreements and to the Management Board. The reform has no effect on the size of the bonus pot, but it does affect how this pot will be distributed in future.
To date, variable remuneration has consisted of two components: the group component and individual performance. In the opinion of many managers at the institute, the latter was often neglected, according to financial circles. In many cases, strong individual performance would not have had a particularly large impact on the size of the bonus.
A spokesman for the bank has now confirmed that the group and individual components are to be merged into one. In future, supervisors will be able to fully link the bonus to the individual performance of employees.
The structure of variable remuneration has been a sensitive issue at Deutsche Bank since the scandals during and after the financial crisis: the sometimes extremely high bonuses for investment bankers are considered to be one reason for the violations of the law and the high business risks that the bank had taken on for years – and for which she was punished with sometimes heavy fines. For this reason, the institute reformed the remuneration system in 2016 and focused more on community services.
Deutsche Bank: No fall back into old patterns
In addition to the return on equity, “conservative” factors such as the level of the core capital ratio, the debt ceiling or the development of costs were decisive for the group component. These factors will continue to influence bonus payments in the future – although more so when it comes to the question of how much money there is to distribute in total in the bank or in the individual departments.
However, the bank does not want to see the stronger focus on individual performance as a relapse into old patterns. Individual performance is not necessarily measured only by how much an employee sells, but also by how he does it.
In the past few years, the bank had made efforts to make variable remuneration dependent on the success of individual business areas and to differentiate more than in the past. The investment bankers will probably feel this this year: According to financial circles, the bonuses in the division should fall by almost ten percent overall.
Nevertheless, the securities traders in the division can expect higher variable remuneration. The cuts in the issuing and consulting business, which hardly earned anything in 2022, are said to be all the more severe.
More: Deutsche Bank rewards securities traders with higher bonuses