Deutsche Bank bonuses: "The mood is sober. People expect it will be very bad"
Today is Deutsche Bank results day and as we noted earlier, the bank doesn't seem likely to pay strong bonuses for 2023. The investment bank made a €200m loss in the fourth quarter after a goodwill impairment of €233m relating to its acquisition of British mid-market bank Numis. Even without that impairment, profits in the investment bank were down 36% on '22, to their lowest level since the dog days of 2019.
While profits plummeted, Deutsche hired. The investment bank ended the year with over 600 more front office bankers and traders than it started with, an increase of 14%. 300 came from Numis, purchased by Deutsche for...£410m in October '23.
Despite all that hiring and possibly because profits are at their lowest level for four years even without Numis, Deutsche only increased compensation spending in the investment bank 6% year-on-year. Average pay per head fell (slightly) from €129k in '22 to €126k in '23 as a result.
While this may not be the end of the world, averages are deceptive in a population of nearly 17,000 people. Deutsche Bank has a reputation for paying generous guaranteed bonuses and the 300 non-Numis people it hired last year will not have come cheaply, leaving less to go around pre-existing employees.
Fortunately, therefore, expectations are not high. Deutsche Bank these days doesn't pay bonuses until March, and when it does, sources at the bank say they're not hopeful that the bank will be generous.
"The mood on the floor is rather sober, with people expecting it will be very bad," says one director in the investment bank in London. "The bonus pool might stay the same, but there are so many new senior hires, plus the Numis acquisition, that we will each receive less."
For the moment, people at DB in London say senior managers aren't saying much about the bonuses to come. Speaking earlier this month, Deutsche CFO James Von Moltke said bonuses for '23 will reflect performance but that it has been a "difficult year."
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