“The Latest Stage In Our Descent To The Bottom”: Deutsche Bank Asks Top Managers To Skip Month’s Salary In Act Of “Solidarity”

“The Latest Stage In Our Descent To The Bottom”: Deutsche Bank Asks Top Managers To Skip Month’s Salary In Act Of “Solidarity”

Tyler Durden

Fri, 05/22/2020 – 18:59

Last week we reported that Wall Street bonuses are expected to drop by up to 30% this year due to the deep cuts to revenues recorded by banks and hedge funds earlier this year as a result of the coronavirus pandemic. For some (still employed) Deutsche Bank traders the news is even worse: they may have to go without a monthly paycheck too.

According to the FT, the German bank which has teetered on the verge of failure since 2016, has asked hundreds of its top managers to waive a month’s salary in an act of “solidarity” to help “share the pain” as coronavirus wreaks historic damage on the German economy. The bank is reportedly conscious of the optics of large pay packets at a time when millions are losing their jobs or being furloughed.

In a conference call on Thursday, several hundred of the bank’s designated “leaders”, including many of those one level below the senior management committee, were urged to take the voluntary pay cut, people familiar with the matter told the Financial Times.

“As our restructuring plans progress, the management board and the group management committee have decided to lead by example and give a broader group of senior managers the opportunity to be part of this initiative,” said Deutsche in a statement as it “volunteered” senior managers to agree (not that they have any choice once singled out) to a one month pay cut. “This is a voluntary measure in the entrepreneurial spirit and discipline [with which] we are running our company.”

So far the bank does not know how many will participate in the voluntary program; and since there is practically no reward besides some truly pointless “virtue signaling” for any workers who agree to skip a month’s wage – especially since all DB employees are unlikely to get any material bonus this year again – we doubt the uptake will be significant.

Which is not to say there will be no volunteers at all: the nine members of Deutsche’s management board, as well as those on the group management committee, have already agreed to forgo one month of their fixed pay. Of course, they are doing so purely for optical reasons so they have some ammunition for the time when Deutsche Bank requests a bailout and the bank can demonstrate its “solidarity” with the suffering German people.

Chief executive Christian Sewing told investors at the bank’s annual shareholder meeting on Wednesday that the decision was part of an acceleration of its cost-cutting programme. “We act in this way because we in the management . . . see ourselves as responsible business owners,” he said. What he really meant is that the voluntary wage cuts will soon be involuntary…  and far more widespread as the German lender proceeds with another round of mass layoffs in the coming months.

Germany’s largest bank is in the middle of a historic restructuring that began last summer and will cut 18,000 jobs by 2022 as it shrinks investment banking and trims its domestic retail branch network. One can now safely assume that that 18,000 number will be substantially higher.

In the first quarter, Deutsche recorded yet another loss after tripling reserves for bad loans, as Europe’s economy entereed a deep recession amid the lockdown to slow the pandemic. It won’t be the last. Despite a one-time jump in investment bank trading revenue, executives admitted their ambition to finally reach a pre-tax profit this year would be difficult to achieve.

One of the managing directors asked to take a pay cut summarized it best: “Staff are unhappy at this latest stage in our steady descent to the bottom,” while a second person familiar with the internal discussions said that such a voluntary move would be “akin to a gift to the bank.”


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