Open Editor's Digest for free
Rula Khalaf, editor of the Financial Times, selects her favorite stories in this weekly newsletter.
Deutsche Bank has cut cash bonuses for senior executives by up to 50 percent in the wake of a failed IT project that caused chaos for German retail customers and attracted a rebuke from banking regulator BaFin.
This is the second year in a row that the bank's supervisory board has reduced the payments of the bank's senior employees to reflect shortcomings. Last year, the company eliminated €1 million in executive salaries due to lack of achievement and delays in improving internal controls.
The cuts this year, amounting to 1.95 million euros double the previous year, reflect the turmoil at Deutsche Bank's local retail unit.
Last July, the bank said the IT migration process went through without any glitches. But thousands of customers were locked out of their accounts, and service centers were under intense pressure after 12 million customers and 50 billion individual data sets were moved to a different IT system.
In an unprecedented public rebuke, Germany's financial watchdog criticized Deutsche Bank over the issue last year and sent an independent monitor to oversee improvements. The bank failed on CEO Christian Sewing's pledge to fix the problems by the end of 2023 as it discovered thousands of forgotten and unresolved complaints months after it began tackling the issues.
The bank admitted in its annual report that the disruption to customers was “unacceptable,” and said it had failed “to meet its high standards and the expectations of its customers.”
In a letter to shareholders in the annual report, Deutsche Bank Chairman Alexander Wenendts personally apologized to affected clients, adding that the supervisory board “took action as a result and reduced the variable compensation of several current and departing members of the management board.”
The brunt of the cuts has affected Karl von Rohr, the former head of Deutsche Private Bank who left the bank last year after not extending his contract. A close confidant of the seamstress and former executive vice president, von Rohr's cash bonus has been halved to €974,000. Von Rohr's total compensation for the ten months he spent at the bank in 2023 amounted to 5.3 million euros.
The seamer's cash bonus was reduced by 10 percent or €281,000, bringing his total wages down to €8.75 million, from €8.93 million in 2022.
According to the annual report, “the individual degrees to which board members were responsible for these issues were taken into account.” Von Rohr declined to comment. Total compensation for all Executive Board members remained flat at €64.6 million last year.
The bank's total remuneration fell by 6.1 percent to €2 billion, the lowest level since 2020, after the investment bank's revenue fell by 9 percent year-on-year in 2023. The number of bankers earning €1 million or more fell by 12 percent to 505. .
