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Morgan Stanley (MS) - free report >>
Deutsche Bank Aktiengesellschaft (DB) - free report >>
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Deutsche Bank (DB) to Scrap 2020 Bonus for Top Management
Deutsche Bank AG (DB - Free Report) is mulling to scrap the plan of 2020 bonus distribution for top management as it seeks to retain sufficient liquidity to face the consequences of the coronavirus pandemic. The news was reported by Handelsblatt.
As the virus has continued to spread, the European Banking Authority suggested firms to be more prudent with their distribution policies, including variable remuneration. Also, it urged companies to use capital for ensuring continuous financing to the economy.
Cutting bonuses in difficult times would not be new for Deutsche Bank as no bonuses were paid to the management board under former CEO John Cryan from 2015 until early 2018. For 2019, the bank’s total bonus payoff declined 22% to €1.5 billion.
Further, due to chaos created by the novel coronavirus outbreak, Deutsche Bank has decided to pause its 18,000 employee layoff plan “to give employees additional certainty during the outbreak.”
The company’s move comes in line with that of its peers. HSBC Holdings (HSBC - Free Report) has kept aside plans to trim 35,000 jobs at the moment. Also, Lloyds Banking Group (LYG - Free Report) has paused the layoff of 780 employees.
Per a Reuters article, Wall Street biggies such as Morgan Stanley (MS - Free Report) and Citigroup are also putting plans of employee layoffs on hold as the pandemic has raised economic uncertainties.
Our Take
Though Deutsche Bank is adhering to measures to revive the business, it continues to be plagued with several headwinds and remains under the scrutiny of investors. Also, litigation issues related to past misconducts and legal costs might impede its bottom-line growth.
Shares of the company lost 17.2% over the last six months compared with 37.4% decline recorded by the industry.
Deutsche Bank currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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