Deutsche Bank AG is considering slightly higher bonuses for its traders while drastically shrinking those paid to staff who help issue bonds and stocks, reflecting the strong divergence in performance between the two businesses.
(Bloomberg) — Deutsche Bank AG is considering slightly higher bonuses for its traders while drastically shrinking those paid to staff who help issue bonds and stocks, reflecting the strong divergence in performance between the two businesses.
The German lender is debating an average increase in variable compensation of about 10% for executives buying and selling fixed-income securities and currencies after the unit posted another successful year, people familiar with the matter said.
The total handed out within the division advising companies on deals and issuing debt and equity, known as Origination & Advisory, might fall by as much as 40%. That would drive total bonuses in the investment banking division down by less than 10%, the people said asking not to be identified discussing the private information.
A spokesman for Deutsche Bank declined to comment.
The bonus decision will cap a year in which Deutsche Bank’s trading unit, led by Ram Nayak, continued to grow, cementing its role as the lender’s biggest revenue engine by far and perhaps the single most important reason why Chief Executive Officer Christian Sewing’s turnaround strategy is widely considered to be successful. By contrast, the O&A unit headed by Mark Fedorcik saw revenue drop by 58% in the first nine months of 2022 as deals ground to a halt across the financial industry after bumper income the year before.
One important consideration at Deutsche Bank is to ensure that bonuses are roughly in line with the competition, the people said. The bank doesn’t want to pay much below average because that may complicate filling positions and keeping talent, but it also doesn’t want to end up paying more than it deems necessary to achieve those goals given cost constraints.
Read More: JPMorgan, BofA, Citi Slash Banker Bonuses as Talent War Ends
Deutsche Bank is seeking to hold on to the market share it has regained in fixed-income trading over the past few years and it’s carefully expanding into new products as part of that effort, Bloomberg has reported. Americas CEO Christiana Riley told Bloomberg TV on Tuesday that the lender may hire “opportunistically” given the sweeping rounds of job cuts announced by some rivals.
The Financial Times first reported the 40% cut in bonuses for Deutsche Bank’s investment bankers. Bloomberg reported that the bank was planning to cut bonuses for dealmakers in December.
Read More: Deutsche Bank Weighs 4% Base Pay Hike, Dealmaker Bonus Cuts
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