Deutsche Bank would raise bonuses to traders, lower 40% to advisers

The German bank is debating an average increase in variable compensation of around 10% for executives who buy and sell fixed-income securities and currencies, after the unit posted another successful year, people familiar with the matter said.

The total distributed within the division that advises companies on operations and issues of debt and capital, known as Origination & Advisory (O&A), could fall up to 40%. This would mean a reduction in total bonuses in the investment banking division of less than 10%, said the cited sources, who asked not to be identified because the information was private.

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A Deutsche Bank spokesman declined to comment.

The bonus decision will cap a year in which Deutsche Bank’s dealing unit, led by Ram Nayak, has continued to grow, cementing its role as the bank’s biggest revenue engine by far and perhaps the biggest reason why CEO Christian Sewing’s turnaround strategy is hailed as a success. By contrast, the O&A unit, led by Mark Fedorcik, saw its revenues fall by 58% in the first nine months of 2022, due to a halt in operations across the financial sector following the extraordinary revenues of the previous year.

An important consideration at Deutsche Bank is ensuring bonuses are more or less in line with the competition, the people said. The bank doesn’t want to pay much below average because that can make it difficult to fill positions and retain talent, but it also doesn’t want to end up paying more than it thinks is necessary to achieve those goals given cost constraints.

Deutsche Bank is trying to maintain the market share it has regained in fixed income trading in recent years and is carefully expanding into new products as part of that effort, Bloomberg reported.

The executive director for the Americas, Cristiana Riley, told Bloomberg TV on Tuesday that the bank could hire “opportunistically” given the sweeping rounds of job cuts announced by some rivals.

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The financial times was the first to report the 40% cut in bonuses for investment bankers at Deutsche Bank. Bloomberg reported in December that the bank planned to cut bonuses for those in charge of operations.