How big was the bonus pool for Deutsche Bank's investment bank in 2017? We'll only know for certain when DB releases its compensation report on March 16th. In the meantime Deutsche board member Karl von Rohr has informed news agency Deutsche Presse-Agentur that the bonus pool for the whole bank was €2bn for last year, up from just €546m for 2016. Some people at Deutsche Bank should clearly be happy.
Those people appear to be working in Deutsche's investment banking division (IBD). Our initial enquiries last week suggested that people in Deutsche's investment banking division are mostly happy with their new bonuses, describing themselves as 'seven to nine' on a satisfaction scale of one to ten.
Headhunters confirm the euphoria. "Deutsche Bank pushed the boat out for IBD bonuses this year," says one London M&A headhunter, speaking on condition of anonymity. "I've come across people there whose compensation is now top of the market for their position," he adds. "There are first year MDs at Deutsche Bank who are now being paid well north of $1m.- I would be amazed if anyone got more than that anywhere on the Street."
Nor is just managing directors (MDs) who have been paid well. Another London M&A headhunter, also speaking off the record, says he's spoken to senior vice presidents at Deutsche Bank who are now on £400k to £410k ($555k to $567k) in total compensation. While this isn't high compared to some U.S. banks, it is high among European banks. In particular, headhunters say it's a lot more than some bankers were paid at Credit Suisse this year.
"Credit Suisse just didn't pay for 2017," claims one headhunter. "You now have some senior VPs at Deutsche on £410k, whereas the max I've seen at Credit Suisse was more like £330k."
Credit Suisse has yet to disclose its compensation report, but CEO Tidjane Thiam indicated in November that employees shouldn't expect big increases in their bonuses this year. During last month's call to accompany Credit Suisse's fourth quarter results, Thiam reiterated that employees shouldn't expect a big bonus rise.
Deutsche's generosity didn't seem to be all-pervasive. One Deutsche banker complained that heads of teams seemed to have sequestered the bonus pool for themselves and that, "those who produced got paid below market and those who didn’t make budget got nothing." Headhunters point out that Deutsche's bonuses were effectively for two years. "They took the view that they wanted to make a signal that they're committed to the investment bank," says one. "Last year's pay was a write-off - this is for 2016 and 2017," he adds.
Deutsche's big bonus recipients can thank the German bank's decision to cull managing directors and directors before bonuses are paid, making the bonus pool less thinly dispersed. By comparison, Credit Suisse used last November's investor day to boast about all the managing directors it's been hiring. Maybe the Credit Suisse bonus pool was squandered on guarantees to new joiners?
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