Court case on bonuses starts

City A.M. Reporter
UNLESS a last-minute settlement can be reached, around 100 bankers will this week pitch themselves against Commerzbank, the part state-owned German lender, in a four-week London trial over €52m (£44m) in unpaid bonuses.

The row, which returns to court amid increasing public anger over the size of bank payouts, will see Commerzbank chief executive Martin Blessing clash with former Dresdner investment bank head Stefan Jentzsch when it starts on Wednesday.

The legal spat is likely to fan the flames of public anger at a time when high inflation, rising job losses and sharp government spending cuts eat into the livelihoods of Britons asked to bail out the banking sector in the 2008 credit crisis. The group of 104 London-based former Dresdner bankers launched their legal battle in late 2009 after some were paid only 10 per cent of the bonuses they had been promised for 2008 out of a guaranteed minimum bonus pool of €400m.

The case hinges on whether Germany’s second-largest bank, which bought Dresdner in January 2009, was entitled to slash bonus awards for some of its staff by invoking a so-called Mac clause -- a material adverse change in economic conditions.

Commerzbank, which had to be bailed out by the German government after buckling in the credit crisis, has long argued that discretionary bonuses were dependent on the bank’s performance -- although an attempt to dismiss the case last year was rejected by the Court of Appeal.