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Deutsche Bank announced Tuesday some 1,900 employees are about to hit the street as a weakened euro dampened revenues in the face of rising costs. For employees inside the struggling bank, the euro’s decline has meant things have gone from bad to worse.
Deutsche Bank is one of the only global banks to peg large pieces of its employee compensation to the euro — meaning, as the euro continues to decline, so does the value of the bank’s top performers.
Here’s the full breakdown: Bonuses at the vice president level and above are divided into three parts. One-third is paid up-front. Another third is deferred in the form of Deutsche Bank stock . And the final third is deferred in euro-based cash, a source of consternation for non-euro zone bankers watching their pay fall. At least 30 percent of the company’s employees are located outside the euro zone and Africa, according to company filings.
“When the euro was rising, this was a great thing,” said one senior banker who requested anonymity because he was not authorized to speak about compensation. “I guess it can only go up from here.”
While the initial bonus amounts are set in stone, the latter two portions are paid out equally over three years — meaning deferred compensation has been subject to swings in both Deutsche Bank shares and the euro.
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