COMMERZBANK faces a high-profile lawsuit from 104 of its investment bankers over a bonus dispute, after the Court of Appeal yesterday rejected the bank’s request to dismiss the case.
Current and former bankers, who worked for Dresdner Kleinwort before Commerzbank took it over in 2009, are suing to recover €52m (£44.7m) in bonus payments from 2008 and will now prepare for a full trial in 2012.
The case could force Commerzbank to reveal details of Dresdner’s bonus decisions and set a precedent for other banks that have withheld bonuses when the company was struggling.
Commerzbank argues that the bank was entitled to slash bonus awards because the bank’s economic conditions had materially changed, based on Dresdner’s €6.2bn losses during the bonus period.
The court has heard that bankers learned about a guaranteed €400m bonus pool during a meeting in August 2008, but the bank ended up paying out around €272m.
The court yesterday allowed the bankers to argue that contractual promises were made during internal meetings, as well as in written form, in a blow to the bank’s case.
Judge Andrew Morritt said: “I see no reason why the promise of a guaranteed minimum bonus pool cannot be contractually binding even though individual employees cannot at the time point to an entitlement to a specific bonus payable out of it.
“At the very least each of them would be entitled to nominal damages for its breach,” he added.
Commerzbank said it was disappointed by the decision but that it will defend itself against the claims.
The bank declined to comment on whether it might appeal the latest judgment or consider a settlement.
Law firms Stewarts and Mishcon de Reya are representing the bankers, while Linklaters is acting for the bank.