Deutsche Bank’s investment bank is now awash with ‘material-risk-takers’ (MRTs) – employees who fall under the most onerous regulatory pay restrictions – and they’re expensive. A 124% increase in regulated employees across the bank has resulted in 2,057 such individuals from its investment bank earning an average of €1m ($1.1m) each.
Deutsche Bank’s 2014 annual report reveals that there are now 2,903 people within the organisation classified as MRTs, an increase from 1,295 on the same period in 2013. The vast majority lie within its corporate banking and securities division, meaning that if – as expected – Deutsche’s strategy review focuses on cutting costs from its retail banking division, this wage bill is going to be hard to shake off.
Deutsche spent a total of €2.1bn on the MRTs in its investment bank – or an average of €1m a head – which is an increase on the €767.2k average in 2013. The closest comparable pay was within its asset and wealth management division where average pay per head was €981.9k.
What's more, the figures suggest Deutsche Bank has handed out massive salary increases to side-step the EU bonus cap. In 2013, it paid €324m in base salaries for its MRTs in investment banking and €1,065m was in (largely deferred) bonus payments. Last year, despite a 73% deferral rate on its bonuses for regulated employees, €980m was allocated to fixed pay and €1,092m in bonuses - this isn't far off a 50:50 split. As the chart below shows, this is a similar story across the organisation.
On a per head basis, average fixed pay for MRTs in Deutsche's investment bank was €250k in 2013 and this rose to €476k last year. Deutsche was one of the only major banks not to implement role-related allowances, meaning that this hike was purely down to salary rises.
To suggest that all MRTs were hauling in over €1m would be misleading, however. In fact, 816 people across Deutsche Bank earned more than this amount and, as the graph below shows, most of these earned €1-1.5m.
The implication is that it’s possible to earn more money working for Deutsche’s investment bank than other divisions, but the MRT average is likely to be inflated by a few very high earners. Deutsche also paid some sign on bonuses last year - 15 MRTs were paid €6.09m, or €406k each.
Across the organisation, though, you have a less than 1% chance of earning over €1m – Deutsche Bank has 98,138 employees, 816 of whom were earning more than €1m.
Elsewhere, Deutsche Bank has been ramping up its graduate recruitment. It hired 751 people on to its graduate programme in 2014, a 19% increase on the previous year and another 522 students were brought in as interns.
Deutsche is also keen to point out how many people it’s been hiring to ensure that it doesn’t fall victim to any more trading scandals. Last year, 700 people were hired into its front office supervisory ‘lines of defence’ compliance team and 20,000 people received training in whistleblower techniques.
What’s more, it says, 400 managing directors (or 90% of those asked) attended two-day seminars on addressing cultural change within the organisation.
With contributions by Florian Hamann