Sigh

Deutsche Bank has been forced to defend plans to pay staff bigger bonuses despite racking up a third consecutive net loss for 2017.

A report in German newspaper Frankfurter Allgemeine Sonntagszeitung this weekend that Deutsche Bank is planning to more than double its bonus pool to more than one billion euros has sparked a political backlash in the country.

Martin Schulz, leader of the Social Democratic Party, which is in coalition talks with Angela Merkel’s ruling party, said the plan “hurts our solidarity”.

A German government spokesman ratcheted up the pressure further today, warning Deutsche Bank “the company management must of course ask what impression it leaves in public”.

On the one hand, bonuses and pay must be linked to actual results, results which come from the efforts of those gaining the bonuses and pay. That seems like a reasonable structure too. So, stock awards aren’t just because share prices in general rise, but are measured against, say, the stock prices of peers.

All quite fine by me.

So, now we’ve got the bank making a bit of a turnaround. Operating profits are, as I understand it at least, up. But accounting profits are down, into losses. Because of the change in US tax laws. This isn’t something created nor done by the work of those inside the bank now, is it? So bonuses, given the above insistence, should be affected by it or not?

And if the tax changes had added a few billion to the bank’s profit would all be fine with the bonus pool expanding? If not, why the whining now?

6 comments on “Sigh

  1. German politician campaigns for caps on employee compensation (including lots of German people) so that shareholders (largest of which is Chinese conglomerate with murky ownership links to communist leadership) will be richer.

    Makes sense to me.

  2. “Deutsche Bank has been forced to defend plans to pay staff bigger bonuses despite racking up a third consecutive net loss for 2017”

    Who is complaining? If it’s the shareholders, fine, have a discussion. If it’s anyone else, fuck off, what’s it got to do with you?

  3. I think Schulz might have a point. I’d be willing to bet DB is as much a leach on the state, in one form or another, as most German companies are. It wouldn’t surprise me if there are all sorts of improprieties within DB which, like was certainly the case with VW, the German government knows about but is keeping quiet because “it’s good for Germany”. Frankly, I don’t consider DB any more independent of the German government than I do BNP not existing primarily to serve the interests of the French government.

  4. “Employers pay what they have to pay to attract and retain people who can do what they want done.” – GC

    Retaining employees is always required, whether you are making a profit of not.

    And +1 to Andrew C.

  5. Much less contentious back in days bonuses were paid in gold sovereigns – Mr X’s bonus is nominal £1,000

    +1 on not trusting DB, BNP etc Euro-zone banks

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