Deutsche Bank slashes bonuses as it scrambles to raise cash

Deutsche Bank has slashed its bonus pool by more than three-quarters as the embattled German lender races to shore up its balance sheet.

The bank, which is Germany’s biggest, revealed it paid out just €500m in bonuses last year, down 77pc from its €2.4bn pot in 2015.

Overall, total compensation at Deutsche fell from €10.5bn to €8.9bn last year, after the lender slumped to a €1.4bn net loss in 2016 as its woes mounted.

Bonuses at the German firm fell as its British boss John Cryan attempts to reduce costs as part of an overhaul to revive its fortunes after years of legal investigations, fines for misconduct, and a programme to cut back its investment bank pushed it into the red. Its losses last year followed a huge €6.8bn loss in 2015.

Mr Cryan is now in the midst of embarking on an €8bn rights issue to bolster Deutsche’s finances, its fourth cash call since the financial crisis.

The bank has confirmed that it will sell new shares at €11.65 each, a discount of 35pc to the stock’s closing price on Friday night.

As well as the rights issue, Mr Cryan’s has also scrapped plans to sell-off German retail banking division Postbank.

The lender said in its annual report today that it planned "to return to our normal compensation programs in 2017". It also told investors that its expects "a meaningful client activity pick-up in 2017, of which we have already seen evidence in the beginning of this year" and that revenues are forecast "to remain broadly flat compared to 2016".

Net revenues fell by 10pc to €30bn last year.

“The outlook reflects the expected modest economic recovery in Europe, while growth in the Americas is expected to benefit from fiscal stimulus, as well as the positive impact of an improving interest rate environment,” Deutsche said.

To add to its litany of problems, investor confidence in Deutsche was severely dented last year after it leaked that US authorities were demanding €14bn from the bank to settle allegations it mis-sold toxic mortgage-backed securities that contributed to the financial crisis. In December, Deutsche eventually settled the probe for €7.2bn.

The bank’s management team did not receive any bonuses last year. It cut 1,360 staff last year to take its total down to 99,744.

“Our goal is to strengthen our position as a leading European bank with global reach, supported by our strong position in our home market, Germany,” he said. “A solid capital base is essential if we are to succeed in our future strategy and capture growth opportunities for Deutsche Bank.”

The rights issue will involve Deutsche selling 687.5m new shares. The capital raise starts tomorrow and will finish on April 4.

Mr Cryan in the past said the lender would not turn to its shareholders for more funds but performed a volte-face after lender struggled to offload Postbank.

Deutsche shares slid 3.3pc to €17.28 in morning trade as investors braced for the rights issue.