A FORMER manager at Dresdner Kleinwort investment bank has told a court he deserved a €600,000 (£501,171) bonus because he had stayed with the bank in 2008 and helped steer it through the meltdown in the markets.
Desmond McNamara, the first banker to take the stand in the trial over €50m of retention bonuses, said the payout was a “vote of confidence” from his line manager for his work before and after the collapse of Lehman Brothers on 15 September.
McNamara, former head of risk at Dresdner’s capital markets division, who was paid a base salary of £130,000, was paid a guaranteed bonus of €300,000 but received nothing of a further discretionary payment of €300,000. He said he had represented a “good deal” for the bank because of the work done during the financial crisis and in the run-up to Dresdner’s sale to Commerzbank.
“During the period of Lehman’s [collapse] it was unprecedented market movements. At the time of the Lehman default we did a huge review of our positions with Lehman. In the following week we had a record week because we knew our position with Lehman. The retention meant we had the people around to do that.”
McNamara is one of 104 ex-Dresdner bankers who have taken parent firm Commerzbank to the High Court over payments in an industry where “one’s word is one’s bond”. They say “binding and enforceable contractual promises” mean they are owed €50m from a guaranteed minimum retention pool of €400m for 2008 performance.
Earlier Tom Linden, QC, representing Commerzbank, told the court that Dresdner’s statements about bonuses had not been legally binding.
This is reinforced by the fact that pledges about bonuses made in August by then Dresdner chief executive Stefan Jentzsch were not recorded or accompanied by a written announcement, Linden said.
Commerzbank also says its decision not to make the payouts was taken in light of a performance clause and the €6.3bn loss posted by Dresdner’s investment banking operation for 2008. The trial continues. Commerzbank boss Martin Blessing is expected to give evidence on Monday.