Pay Hike Watch '15: Credit Suisse, Deutsche Bank

Credit Suisse and Deutsche Bank are said to be raising junior banker base pay. This is happening so the banks can cut said junior bankers' bonuses so senior bankers don't have to feel bad about themselves. Just go with it.

Author:: Bess Levin
Updated:: Jan 14, 2019
Original:: Feb 17, 2015

The banks are doing this to be nice to their littlest bankers but also to spare the feelings of their big kid bankers.

Credit Suisse has in recent weeks increased pay for some of its most junior grades while Deutsche is reviewing salaries for its analysts, associates and vice-presidents, according to people familiar with the situation. The moves come in response to new EU rules that cap bonuses for senior bankers at twice salary. These prompted a wider rethink of remuneration practices across the industry. Most junior bankers are not directly affected by the new rules. But banks are reducing their bonuses anyway so they do not receive bigger awards than their bosses, or become accustomed to large windfall payments. At the same time, they are increasing their salaries to offset lower bonuses, so there is no impact on total pay. Investment banks have increased junior salaries by as much as 20 per cent in some cases. The changes leave the junior bankers in a stronger financial position, since a larger proportion of their total pay is guaranteed, even if the bank performs badly.

Credit Suisse and Deutsche Bank review junior bankers’ pay [FT]

The Germans have finally relented.

Things could be better in Europe. Big investment banks in Europe, including Nomura, Credit Suisse and UBS, are stepping up plans to cut jobs as they seek to adapt to a drastic slowdown in revenues and tighter regulation. Bank executives, headhunters and analysts say that the cuts are shaping up as the deepest since the start of the financial crisis after a disappointing summer dashed hopes of a business revival. One senior headhunter said many large investment banks will have “at least 20 per cent” fewer staff in capital markets and M&A advisory business in Europe by the end of the year compared with late 2011. “It [the market] has never been as bad as this. Bankers have long lost confidence in their banks but now they are also losing their self-confidence, their mojo,” a senior advisory banker said. Among the banks that will reduce their investment banking workforce is Japan’s Nomura, where London-based bankers say that they expect several hundred jobs to be removed in Europe alone as part of a $1bn cost-cutting effort. Switzerland’s largest bank UBS, which cut staff levels earlier than rivals by announcing 2,000 job cuts in the investment bank after a $2.3bn unauthorised trading loss last year, is preparing for intensified cuts as it is seeking to streamline further the unit, several people familiar with the situation said. At Credit Suisse, insiders estimate that the additional SFr1bn ($1bn) in groupwide cuts that were announced in July will translate into up to 1,000 jobs being lost, most of which would be in the investment bank. Analysts expect also Deutsche Bank and Barclays to reduce their headcount further this year. Deutsche said two months ago it would reduce staff levels by 1,900. Investment Banks Eye Europe Job Cuts [FT]

Some people are happy with raises Barclays junior bankers are set to receive. Others, like the people just above them on the totem pole, who can only sleep at night knowing the pissants they work with are being paid significantly less money, are not as thrilled.

While Brady Dougan is keeping his job, the same cannot be said for 1/3 of European investment bankers. Credit Suisse is to cut senior staff in its European investment banking department by up to a third, three sources familiar with the matter said, as tighter regulation and weak markets hit the sector. "In the European investment banking business, they are going to get rid of 60 directors and managing directors," one source said on Monday. The investment banking department affected advises on mergers and acquisitions, stock market listings, financing and debt issues, as opposed to other areas of the broader investment bank that focus on securities trading. "It is about a third of the directors and 10-15 percent of the MDs," the first source said, referring to what are typically two most senior job ranks in the banking world. The layoffs would happen in July, this person said. The formal redundancy process can last several months. A second source said the cuts could end up affecting 20-30 percent of senior investment banking staff in Europe. Credit Suisse To Make Heavy Job Cuts In Europe [Reuters]

Cryan.CalmDown

It's starting to dawn on Deutsche Bank that senior executives are pretty keen on - like - getting bonuses or whatever.

The bad news is that big execs will be receiving tiny bonuses. The good news is that most of them will be keeping their jobs, unlike some other employees at the bank.