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Deutsche Bank slashed cash bonuses of senior executives by up to 50 per cent in the wake of a botched IT project that caused chaos for German retail clients and attracted a rebuke from banking watchdog BaFin.
It is the second year in a row that the lender’s supervisory board has trimmed payouts for the bank’s most senior staff to reflect shortcomings. Last year it axed €1mn in executive pay over missed milestones and delays in improving internal controls.
This year’s cuts, which at €1.95mn are twice as high as the previous year, reflect the disruption at Deutsche Bank’s domestic retail unit.
Last July, the bank said the IT migration had unfolded without glitches. But thousands of clients were locked out of their accounts and service centres were overwhelmed after 12mn clients and 50bn individual data sets were moved to a different IT system.
In an unprecedented public rebuke, BaFin chided Deutsche Bank over the issue last year and dispatched an independent monitor to oversee the improvements. The bank missed a pledge by chief executive Christian Sewing to fix the issues by the end of 2023 as it discovered thousands of forgotten and unresolved complaints months after starting to remedy the problems.
The bank acknowledged in its annual report that the disruption for clients was “unacceptable” and said that it failed “to meet its own high standards and the expectations of its customers”.
In a letter to shareholders in the annual report, Deutsche Bank chair Alexander Wynaendts personally apologised to affected clients, adding that the supervisory board “has taken action as a result and reduced the variable compensation of several current and departed Management Board members”.
The brunt of the cuts affected Karl von Rohr, the former head of Deutsche’s private bank who left the bank last year after his contract was not extended. A confidant of Sewing and former deputy chief executive, von Rohr’s cash bonus was halved to €974,000. Von Rohr’s total compensation for the 10 months he worked at the bank in 2023 stood at €5.3mn.
Sewing’s cash bonus was reduced by 10 per cent or €281,000, resulting in a decline in his total pay to €8.75mn, from €8.93mn in 2022.
According to the annual report, “the individual degrees to which the individual Management Board members were accountable for the issues were taken into account”. Von Rohr did not immediately respond to a request for comment. The total compensation for all members of the executive board remained steady at €64.6mn last year.
The bank’s overall bonus pool dropped 6.1 per cent to €2bn, the lowest level since 2020 after revenue at the investment bank declined 9 per cent year on year in 2023. The number of bankers earning €1mn or more fell 12 per cent to 505.
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