The CEO of the largest German bank earned significantly more than in the previous year. But four of his employees received an even higher salary than he did.
(Photo: dpa)
Frankfurt More profit, more bonuses: The better business results in the past year are also paying off for many employees at Deutsche Bank. The sum of the performance-related variable remuneration increased by 13 percent to 2.1 billion euros in 2021, as the institute announced in its annual report on Friday. At the same time, the institute’s retention and new hire bonuses have halved to 135 million euros. In total, the bonuses paid increased by only four percent to 2.2 billion euros.
The number of income millionaires has fallen again after a significant increase in the previous year – at least that applies to the employees whose income the bank publishes. As of this year, this only applies to “material risk takers” who have a major impact on the bank’s risk profile. Last year there were “only” 520 employees among the risk takers who earned seven figures. In the previous year there were still 614 income millionaires among the risk takers of the bank.
“This reduction is primarily due to a lower number of retention bonuses and severance payments granted,” the institute said. However, the top earners who are not risk takers are missing from the figures for the top earners. Last year, this applied to at least 70 people. The bank declined to say why it is no longer providing information about all of its top earners. In financial circles it was said that the institute was adapting to the practices of European competitors.
Compared to its European competitors, Deutsche Bank has an unusually high number of millionaires. The big US houses don’t have to provide such detailed information about the income of their employees.
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The board of directors, who had given up a twelfth of their annual salary last year, also earned better again last year. The total remuneration of top management increased from a total of 47.3 million euros to 66.5 million euros. This information is distorted by a number of points.
On the one hand, there were several changes on the board: Rebecca Short only joined the board in May 2021, Frank Kuhnke left the board last May. There were also changes in 2020. Legal Director Stefan Simon and Asia Director Alexander von zur Mühlen only joined the executive committee in August.
If you factor out all these factors, the salaries of the board members who have been in office since 2020 have still risen by around 14 percent according to Handelsblatt calculations. This value is obtained when the salaries of Simon and von zur Mühlen, which were only paid from August, are extrapolated for the year as a whole and the board members’ waiver of a monthly salary in 2020 is deducted. The remuneration of Short, who has only been on the board since 2021, is not taken into account.
Beware of cyber risks
In terms of risks, the focus of the annual report is on Russia and the war in Ukraine. A few days ago, the bank had already put its net credit exposure in Russia at a comparatively low 0.6 billion euros. However, the institute acknowledges that the economic fallout from the war “could affect our ability to meet our financial goals.”
The crisis has the potential to push up already high energy prices in Europe, which could lead to an economic slowdown and thus higher losses, including higher loan defaults. On Thursday, the bank presented its new goals for the next three years and promised a return on equity of more than ten percent by 2025.
In addition, the money house warns in the annual report of the possible consequences of cyber attacks and the risks of implementing the sanctions imposed by the West, including possible Russian countermeasures. The bank is dealing with an “unprecedented number of sanctions measures that are not fully coordinated in all countries and therefore further increase operational complexity and the risk of errors in the processing of day-to-day business”.
In 2008, Deutsche Bank had to pay $258 million for violating US sanctions. At that time, the US authorities sent an external watchdog to the bank to monitor compliance with the sanctions laws.
The bank’s legal risks have decreased somewhat overall since 2020. For litigation risks that are likely to result in a financial burden, the bank continued to set aside provisions of 1.1 billion in 2021. In addition, there are 1.8 billion euros for litigation risks, which can be reliably estimated but whose occurrence is rather unlikely. In 2020, this sum was still 2.3 billion euros.
More: Deutsche Bank wants to distribute eight billion euros to shareholders by 2025