Deutsche Bank confident fewer people will resign after bonuses this year

Deutsche Bank may be planning to cut bonuses across the bank by 20% this year, and to cut bonuses in its (better) performing fixed income currencies and commodities unit by 30%, but it doesn't expect an exodus of staff as a result.

Speaking during today's fourth quarter investor call, Deutsche CEO Christian Sewing said the bank isn't expecting a repeat of the 'staff attrition' it experienced after disappointing bonuses last year. After 2019's "harsh and tough" decisions, Deutsche is benefiting from "corporate clarity", said Sewing. "I am confident that we will not see higher attrition in 2020 than in 2019," he added.

Sewing didn't say so explicitly today, but his optimism seems to stem from the fact that Deutsche achieved its highest score for five years in its 2019 employee satisfaction survey.

Much was made of employees' increased satisfaction at Deutsche's 'investor deep dive' in December. "I personally think it’s because we finally have the corporate clarity we have been missing for so long," said Sewing of the survey result at the time. 75% of Deutsche's employees "embraced the transition", which included 18,000 (ongoing) job cuts and the closure of the equities business, said Sewing: "This time is different. Our clients feel it, our leadership team feels it and our employees feel it."

Will that happy feeling outlast a 30% cut in bonuses? Sewing clearly thinks so. Some bonuses at the bank may even be spared this year. While Deutsche will "see a reduction on comp overall," Sewing said today that attention has been paid to the operating performance of individual business and that Deutsche, has "done everything to appreciate and acknowledge the performance of those colleagues and businesses which have reached their targets." 

And which businesses will those be? Sewing didn't say exactly. However, for 2019 as a whole Deutsche's best performing business relative to rivals looked like debt capital markets (DCM). "We have been very happy with the performance of debt orignation in investment grade and in high yield," said Sewing today. 

Reflecting the more upbeat mood at the bank, analysts at SocGen upgraded Deutsche to hold and said they are no longer an "uber-bear," about the bank's stock. "This company is getting smaller and less risky. All other FY19 targets were met or exceeded. The results cement our Positive credit view. We count DBK as one of the big outperformers in 2020," they added. Even if Deutsche stock bonuses are smaller this year, it may now make good sense to hold onto them.

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