DEUTSCHE Bank yesterday became the first major investment bank to reveal the impact of the UK government’s bank payroll tax on its finances, after it poured a total of €225m (£196.2m) into Treasury coffers.
The disclosure came as Deutsche reported its fourth straight quarterly profit, taking full year pre-tax income to €5.2bn and more than reversing 2008’s pre-tax loss of €5.7bn.
The bank said its earnings had been driven by its investment banking division, though analysts warned that the €397m fourth quarter pre-tax profit figure for corporate banking and securities constituted a “weakish” performance against US peers.
Deutsche said it had paid out €11.3bn in compensation and benefits last year, an 18 per cent increase on the amount it coughed up in 2008. Chief executive Josef Ackermann has vowed to pay the bank’s senior employees a higher percentage of their earnings in fixed compensation than discretionary bonuses in order to offset new international regulations on pay, though the change only took effect from the start of 2010.
Ackermann said yesterday that the group would lift salaries by between 30 and 55 per cent to make compensation “more balanced”.
The bank said it had taken a €225m hit on the UK government’s bonus tax, under which it paid a 50 per cent levy on all bonuses over £25,000. City estimates suggest the figure means Deutsche paid out at least £600m in bonuses to its 8,000-odd UK staff, though the bank has a policy of not disclosing the size of its bonus pool.
Deutsche said it increased its tier one capital ratio to 12.6 per cent at the end of 2009, up from 10.1 per cent at the end of 2008. The bank recommended a dividend payout of 75 cents per share, up from 50 cents in 2008.