THE handling of 9,000 job cuts was a bigger concern than the decision to renege on a “promise” to pay €50m (£41.8m) in bonuses, the chief executive of Commerzbank told the High Court yesterday.
Martin Blessing (pictured) said the redundancies were “more important than the bonus pool” at that time and insisted he acted with “honour”.
Blessing spent several hours in the witness box explaining the refusal to pay out part of the €400m guaranteed retention pool at Dresdner Kleinwort investment bank, which was taken over by Commerzbank in January 2009. The German government bailed out Commerzbank during the financial crisis.
“The promises were given in a totally different situation…. then the economic situation deteriorated and Commerzbank had to take government money at the beginning of November,” Blessing said.
“We broke our promise because we thought it was necessary. It was the right thing to do.”
Blessing admitted the decision “eroded trust” in the board but said the bank had to take into account the interests of shareholders, legal obligations and public opinion in Germany.
Central to the bank’s defence is its decision to invoke a “material adverse change” clause as a reason not to pay up. Blessing said the promises were not a “binding commitment”.
“If I promise my wife to be home at 8pm for dinner and come in at 9pm I have not broken a contract.”
Commerzbank has run up nearly £4m of legal costs with Linklaters during the dispute, said Andrew Hochhauser QC, representing 21 of the 104 bankers who claim they are owed €50m in bonuses. The trial continues.