The German multinational investment bank and financial services company Deutsche Bank announced Friday a 29 percent hike in Bonus to staff despite warnings from the European Central Bank (ECB) to keep Pay-outs in check.
Deutsche Bank paid under 1.9 billion euros (approx. 2.3 billion USD) in variable remuneration last year to reward employees after the bank posted its first net profit in the previous six years, around 113 million euros.
The turnaround is generated by a strong performance from the investment banking arm.
As per the bank financial statements, the higher bonuses result from ‘significantly improved financial performance,’ and it is much needed to retain the firm’s top talent.
As per German financial daily, Handelsblatt reported that the ECB had pressed Deutsche Bank to decrease the planned payouts.
Deutsche Bank reportedly initially meant to reward employees to the tune of some two billion euros. In 2019, its bonuses totaled around 1.4 billion euros.
The ECB, which has released massive stimulus to help eurozone banks and the broader economy through the coronavirus outbreak, has urged lenders to show “extreme moderation” in deciding bankers’ variable component’ salaries.
Last year, ECB chief supervisor Andrea Enria said, “Firms should not underestimate the impact of the payment of variable pay in a global crisis.”
The European Central Bank has also suggested that banks build up their capital to overcome an economic crisis.
Deutsche Bank spent just over 10 billion euros in fixed and variable salaries in 2020, a similar to 2019.
Six hundred eighty-four bank employees took home pay packages of a million euros or more each.
The staff’s fixed salary payments fell by 6.0 percent to 7.5 billion euros on “workforce reductions,” it said, but the higher bonuses roughly balance the savings.
The company dropped almost 3,000 full-time jobs in 2020, leaving it with a global workforce of around 85,000.