Deutsche Bank has been called out for reportedly paying top executives exorbitant sums of money in golden handshakes in recent months, while the company was hurtling toward Sunday’s announcement of 18,000 job losses.
The Financial Times says Germany’s biggest bank, which is the world’s 15th-largest by total assets, forked out more than 52 million euros ($58 million) in severance packages for senior executives who were either fired or who left the company voluntarily during the past 14 months. The paper said the amount of money paid to those senior executives in severance deals was about the same as the total cost of salaries paid to Deutsche Bank’s entire management board.
The FT said the payouts were made during “a chaotic period of management turmoil” and could “act as a lightning rod for criticism of the bank” in light of the heavy job losses in the pipeline among rank-and-file employees.
The paper quoted Christine Kuhl, a Frankfurt-based headhunter who is a partner at Odgers Berndtson, who said: “Big severance packages for sacked managers are mad.”
She said they effectively reward executives “who did a terrible job”.
The paper claims the bank paid its chief executive almost 11 million euros in April when he was nudged from his position and the subsequent exit of six other board members reportedly cost another 41 million euros.
The total value of the severance payments was almost a fifth of the bank’s 2018 dividend, which was 227 million euros.
The Guardian newspaper, meanwhile, said some managing directors at the company’s offices in the City of London were being fitted for suits costing at least 1,200 pounds ($1,500) on the very day Deutsche Bank said it was laying off 18,000 workers.The paper said tailors from elite company Fielding & Nicholson were photographed walking out of the bank’s main London office with suit bags on Monday.
Experts predict the bank will shed at least 3,000 jobs in London, where it employs around 7,000 people. Laid off workers will include not only direct employees but contract workers and support staff and the total number of people set to lose their jobs will be around one-fifth of the company’s global workforce.
The bank has said it plans to spend 7.4 billion euros on its restructuring and cost-cutting initiatives,while investing 13 billion euros on new technology, all in a bid to boost revenue, having made annual losses in four of the past five years.
Bloomberg said investors are skeptical about Deutsche Bank’s ability to successfully complete it reorganization. The financial analysts noted that the bank’s stock already had the lowest price-to-book ratio of any big European bank before the reorganization announcement and said its share price plunged by almost 10 percent this week, following the announcement of the layoffs.