Deutsche Bank Eliminates Management Bonuses After "Horrible," "Grim" Results

Tyler Durden's picture


“These are extremely poor results,” Citi’s Andrew Coombs wrote last week after Deutsche Bank CEO John Cryan announced a “sobering” set of numbers for 2015.

By “sobering,” Cryan meant a net loss of more than $7 billion. It was the first annual loss since the crisis and was capped off by a Q4 loss of €2.1 billion which included €1.2 billion in litigation fees.

Revenues missed estimates by 11% and fell 16% Y/Y but that in and of itself “fails to explain €0.7bn of the underlying miss,” Citi’s Coombs continued.”It would appear that the bank has also been forced to book elevated credit losses during the quarter.”

Citi is also looking for some €3.6 billion in additional litigation charges this year.

On Thursday we got a look at the full results for Q4 and the picture is, well, quite ugly.

Investment banking was a nightmare, as revenues plunged 30% in corporate banking and securities where provisions for credit losses jumped from just $9 million in Q4 2014 to $115 million. For the year, provisions rose to $265 million versus $103 million for 2014. Deutsche blamed “valuation adjustments in Debt Sales & Trading, a challenging trading environment, and lower client activity” for the decline in revenues. Fixed income and equities revenue fell 16% and 28% during the period, respectively.

"Another pressing question is if the Deutsche investment bank model is in structural decline," Citi's Coombs wrote today, after parsing the results. "FICC was down -8% yoy in 4Q15 (vs US peers +4% yoy) [and while] management argues there is no structural deterioration, this remains to be seen."

BofAML's Richard Thomas called the trading numbers "horrible" and the overall results "grim." "We think that the bank is in for another difficult year in that guidance is that ‘2016 peak restructuring year’," Thomas said, adding that "it looks like revenues are under a lot of pressure, yet adjusted costs are guided to be flat with another €1bn of restructuring costs."

“In fairness to John Cryan, he signaled that re-orientating the investment bank will have a revenue impact so we shouldn’t be too surprised about that,” Neil Smith, an analyst at Bankhaus Lampe with a buy recommendation on the stock told Bloomberg.

For his part, John Cryan is sorry both for the performance and for himself because as it turns out, he won't be getting a bonus and neither will the rest of the firm's top management. 

It would be inappropriate vis-à-vis society to post €5.2bn in legal provisions in one year and not reflect that in compensation, particularly when the share price has fallen, and shareholders have suffered,” he said, explaining why members of the management team will not receive bonuses for 2015. “By and large, I think we are underpaying against our international peer group this year and I hope that many staff understand why.”

We're sure they understand why. The results are terrible. How long the staff will stay if they aren't getting paid is another matter entirely. 

“Although no one wants to contribute to leading a company when the cost of joining the management board is a diminution in possible compensation, in the context of the overall performance of the bank last year . . . that’s a decision which I respect,” Cryan added.

Deutsche said litigation costs would be "less than 2015," which isn't saying much given that the bank shelled out some €5.2 billion last year paying for the shenanigans of years past. 

As for whether the bank will ultimately have to raise capital, Citi says that's a distinct possibility. Here's why:

We view the leverage ratio as the binding capital constraint for Deutsche. The current 3.5% is well below peers and the company’s own 4.5% target. Post restructuring & litigation charges and a Postbank divestment at 0.6x P/TB, we estimate a pro-forma leverage ratio of c3.3%. This implies a c€15bn shortfall, of which we expect part to be met by underlying retained earnings and part via AT1 issuance. However this still leaves an equity shortfall – we see a c4% leverage ratio by end-2017 – which is likely to necessitate a capital increase of up to €7bn in our view. In addition we note the target CET1 ratio of >12.5% only allows for a 0.25% management buffer above the fully-loaded SREP requirement. This provides the company with limited flexibility especially if BaFin were to introduce a counter-cyclical buffer (max 2.5% add-on).

So as it turns out, it's much harder to turn a profit when you stop cheating as much and when you are forced to fork over billions for all of the cheating you used to do.

It certainly looks as though Cryan's bid to overhaul the investment banking side may be far too little far too late, so don't be surprised to see the equity trading in the single digits by year end.

Oh, and about that dividend; Cryan says it's not coming back until 2017 "at the earliest."

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Thu, 01/28/2016 - 19:33 | 7110946 Fester
Fester's picture

Let's have a party on the roof.

Jump you fu@%'s

Thu, 01/28/2016 - 19:37 | 7110961 waterwitch
waterwitch's picture

DB puts bitchez

Thu, 01/28/2016 - 19:58 | 7111048 Durrmockracy
Durrmockracy's picture

The prices here are not good... that said I might try pick up some more scrap gold today.  You know things are bad when they're cutting bonuses.

Thu, 01/28/2016 - 20:08 | 7111079 BurningFuld
BurningFuld's picture

Whew. Good thing they have all those Greek Bonds to back things up.

Thu, 01/28/2016 - 20:14 | 7111101 I need more asshats
I need more asshats's picture

Time to offshore customer support to Malaysia.

Thu, 01/28/2016 - 20:15 | 7111109 JRobby
JRobby's picture

OH NO! I hope they don's all quit!!!

Thu, 01/28/2016 - 20:21 | 7111132 cheka
cheka's picture

the BRAIN DRAIN hype!!  nice

MUST have billions in HOLIDAY bonus pool money....or else

clawbacks?  NO...also because brain drain

Thu, 01/28/2016 - 20:21 | 7111142 jcaz
jcaz's picture

No bonuses?????

Manhattan real estate just went poof.......

Thu, 01/28/2016 - 21:30 | 7111344 NoVa
Thu, 01/28/2016 - 20:02 | 7111059 Somewhat Evolve...
Somewhat Evolved Monkey's picture

I was thinking about this today actually. Max keiser called DB the next Lehman.


The problem is the share price is already at $15. I looked at the chart of DB, and it already had it's huge crash in 08, afterwards it looks like a deadcat bounce in 09 +, then it just looks like a slow bleed in recent years down. Hard to time.

Thu, 01/28/2016 - 19:57 | 7111043 Tsunami Wave
Tsunami Wave's picture

I wonder if this and other information that may come out someday can answer interesting questions..

Thu, 01/28/2016 - 19:35 | 7110954 2thepeople
2thepeople's picture

Fucking boo hoo

Thu, 01/28/2016 - 19:36 | 7110956 SILVERGEDDON

Don't worry about Douche Bank - they got a whole new crop of Free Shit Army folks to back stop loans to so's they get stick saved by lending revenue.

Thu, 01/28/2016 - 19:37 | 7110962 lordbyroniv
lordbyroniv's picture

this thing on Death Watch yet?

Thu, 01/28/2016 - 19:40 | 7110970 iggenFlot
iggenFlot's picture

I'm getting under the kitchen table with my Mountain House because I'm shaking like a goddamn leaf.

Thu, 01/28/2016 - 19:40 | 7110971 Temporalist
Temporalist's picture

When a banker get a bonus an angel gets their wings.  Think of the angels!  Save the poor bankers!

Fri, 01/29/2016 - 00:13 | 7111966 RaceToTheBottom
RaceToTheBottom's picture

Just tell them about the wings.....  And bring them up to the roof and tell them they can fly.  Let nature take its course.


Thu, 01/28/2016 - 19:40 | 7110972 Kaiser Sousa
Kaiser Sousa's picture

call me when all the bankers have been eliminated....until then -


Thu, 01/28/2016 - 19:41 | 7110974 maskone909
maskone909's picture

When i owe you one hundred dollars, i have a problem. When i owe you 100trillion in derivatives, you have a prblem.

-glencore and friends

Thu, 01/28/2016 - 23:58 | 7111906 401K of Dooom
401K of Dooom's picture

"When i owe you one hundred dollars, i have a problem. When i owe you 100trillion in derivatives, you have a prblem.

-glencore and friends"


What a second!  Didn't Michael "The Nannypants" Bloomberg say that?  It's his shtick.  Let him gag on it!

Thu, 01/28/2016 - 19:49 | 7110975 khnum
khnum's picture

thats a return of  - .0033 per cent on assets

Thu, 01/28/2016 - 19:42 | 7110983 Sanity Bear
Sanity Bear's picture

Wow, management bonuses - this IS serious.

Thu, 01/28/2016 - 20:05 | 7111051 ThroxxOfVron
ThroxxOfVron's picture

"It would be inappropriate vis-à-vis society to post €5.2bn in legal provisions in one year and not reflect that in compensation "


ALL bonuses for the last decade -at a minimum- should be clawed back, if not signifcant amounts of equally as undeserved/exorbitant salaries.

You assholes have ruined one of the premier banking franchises on the planet.

Thu, 01/28/2016 - 20:55 | 7111245 Omen IV
Omen IV's picture

Blame management and not the

It's never about management

Thu, 01/28/2016 - 20:55 | 7111246 Omen IV
Omen IV's picture

Blame management and not the

It's never about management

Thu, 01/28/2016 - 20:55 | 7111247 Omen IV
Omen IV's picture

Blame management and not the

It's never about management

Thu, 01/28/2016 - 19:44 | 7110989 The Fonz...befo...
The Fonz...before shark jump's picture


Thu, 01/28/2016 - 19:50 | 7110999 Yen Cross
Yen Cross's picture

  WTF! Warriors’ San Francisco Arena Gets a Name: The Chase Center | Re/code

  When is the Fed going to start winding down those excess reserves?

 paging Jamie Dimon--- Dimon---Dimon

 Sincerely, Ben Stein

Thu, 01/28/2016 - 20:34 | 7111185 Sanity Bear
Sanity Bear's picture

And of course the Superbowl favorite Panthers play in Bank of America Stadium.


Care to bet whether they get to keep their name on it after the next bailout?

Thu, 01/28/2016 - 20:47 | 7111223 Yen Cross
Yen Cross's picture

  You're awesome....

Thu, 01/28/2016 - 19:49 | 7111007 Bangin7GramRocks
Bangin7GramRocks's picture

I thought banker bonuses would still be paid as the earth begun to liquefy under Wall Street. This is stunning. There must be some backdoor bullshit like deferred stock that becomes 3x their normal bonuses in 3 years when QE6 jacks every stock 200%. I just don't believe those fucking leeches won't get any bonus because of something silly like the company lost billions of dollars.

Thu, 01/28/2016 - 19:51 | 7111022 DrHydralisk
DrHydralisk's picture

Can't be seen to be taking bonus's, when going broke - this time around!

Thu, 01/28/2016 - 20:11 | 7111091 ThroxxOfVron
ThroxxOfVron's picture


They knew it was going to be a shitty year and the insiders probably shorted their own stock to take advantage of it as there probably weren't any options/buybacks payouts..

Thu, 01/28/2016 - 19:53 | 7111032 wow thats is crazy
wow thats is crazy's picture

This is bullshit! These banker should not have to suffer!


I propose a bank bail in to pay these bankers the bonuses they deserve.



Thu, 01/28/2016 - 22:45 | 7111627 peddling-fiction
peddling-fiction's picture

Yep, short your own shitty stock. Thats the way to do it.

Thu, 01/28/2016 - 19:55 | 7111039 buzzsaw99
buzzsaw99's picture

inappropriate, that means they could have taken the bonus anyway if they wanted to. those maggots can get away with anything.

Thu, 01/28/2016 - 20:13 | 7111100 Yen Cross
Yen Cross's picture

 What about the consumer discretionary sector?  Gambling and  Hookers.

 Look at all the Gambling Equities. The Chinese offshore, is getting beaten down, like a dead garden knome.

Thu, 01/28/2016 - 20:10 | 7111087 ghostzapper
ghostzapper's picture

Cover below $1.00.    

Been in and outta this POS on the short side initially from 29-31 and covered almost all of that.  I actually added more at $19.05 on Friday.  This has just seen absolutely massive distribution the last four weeks - gargantuan.  I'm expecting it to open one morning cut in half fairly soon.  Even a market wide bailout may only create limited upside who on earth would bail out this mess specifically.  This chart is implying a BK is forthcoming.  

Thu, 01/28/2016 - 21:59 | 7111464 11b40
11b40's picture

The FED?

Thu, 01/28/2016 - 20:32 | 7111179 Heavenlysunshine
Heavenlysunshine's picture

Deutsche Bank, V0lkswagen and Mercedes Benz need to be screwed by the holohoax zionists.

Judea continues to declares war on Germany!

Thu, 01/28/2016 - 20:48 | 7111226 I need more asshats
I need more asshats's picture

If Trumpo wins he's going to federally fund a holohoax museum in each city with a population over 1500 and mandate biannual k-12 field trips there. He already publicly acknowledged this.

Thu, 01/28/2016 - 20:35 | 7111186 LongMarch
LongMarch's picture

Haha you Deutsche Banks dumbasses. That's not  how you  deal with it .

First, get yourself a bailout.

Next, give yourself hard earned bonuses.

Then, bring out the Hookers and Blow.

It's not hard. What do you think taxpayers are for?

Thu, 01/28/2016 - 21:28 | 7111340 williambanzai7
williambanzai7's picture

Fuck em!

Thu, 01/28/2016 - 22:11 | 7111506 pndr4495
pndr4495's picture

What is coming up from the accounting mud now was wrought over the last 15 to 20 years or so. Fuck 'em is absolutely right, and while we are at it claw back as much money as one can from those resposible for driving a Public Company into the ground, thereby proving they do not give a fuck about their fiduciary obligation to shareholders - a year or less - they're bankrupt. Of course a Central Bank or BIS bailout would kick their can down the strasse for them.

Thu, 01/28/2016 - 21:33 | 7111355 GooseShtepping Moron
GooseShtepping Moron's picture

Gee, it's almost as if importing a million and half rapefugees into a sclerotic socialist utopia isn't exactly good for credit creation.

Thu, 01/28/2016 - 21:38 | 7111367 Promethus
Promethus's picture

Sobering? If I lost $ 7 billion I would start drinking heavily and not stop.

Thu, 01/28/2016 - 21:59 | 7111465 Pumpkin
Pumpkin's picture

With all those deposits just laying there?  Doing nothing?

Thu, 01/28/2016 - 22:48 | 7111634 DrZipp
DrZipp's picture

Uggh some German Bankers are going to have to take their vacation on Aruba instead of St. Kitts, their Croatian girlfriend is having her allowance cut to 7k per month, theiir Wife may have to drive last years Maserrati, those ungrateful little fucks in boarding school in Switzerland are going to have to lay off the coke on alternate Tuesdays, the horror of this no bonus situation is going to have widespread repercussians.

Fri, 01/29/2016 - 06:06 | 7112466 cosmyccowboy
cosmyccowboy's picture

brother can u spare a dime?

Thu, 01/28/2016 - 23:15 | 7111742 firstdivision
firstdivision's picture

Know this.  This is the result of a war between GS and DB which started with the appointment of Draghi.

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