Germany's Deutsche Bank will defer any part of an employee's bonus above 200,000 euros ($264,800) this year, a source close to the bank said, making it the latest industry player to limit pay in the face of fierce criticism of the industry.
Any staff with a bonus at or below the maximum would see half of it in cash, and half of it in equity shares that they can sell in August, the source said.
"Anything above that is paid in deferred compensation," the source said. The deferred portion will also be half cash and half shares, and will be paid out over a period of three years in equal annual installments, beginning in 2013.
The bonus restrictions, designed to affect the 2011 awards being paid out now, are most likely to hit Deutsche's investment bank, the unit where pay is usually higher.
Deutsche is still one of the best payers in the industry, even topping Wall Street rival Goldman Sachs this year. Average pay for Deutsche's investment bankers was 332,785 euros in 2011, down 12 percent on 2010 levels.
A rocky six months for bond and stock trading and deal-making has dented banks' income, however, adding to the pressure for firms to rein in pay, just as public scrutiny over big rewards is growing.
In the U.K., for instance, where anger over banking bonuses has been a burning political issue since the financial crisis, the chief executive of state-controlled Royal Bank of Scotland was pressured into giving up his bonus.
Deutsche's bonus pool was down 17 percent across the whole group for 2011, and rivals are taking similar steps. Switzerland's UBS cut the bonus pot for its investment bankers by 60 percent.
Deutsche Bank declined to comment.
Year-end bonuses at Barclays' investment bank, due to report on Friday, are expected to be down about 30 percent this year, on average, a source familiar with the matter has said.
Like Deutsche, other banks are also tinkering with the structure of pay and putting caps on how much is paid out immediately, or increasing the amount paid in shares.
Bank of America Corp may give shares worth $1 billion to employees instead of cash as part of bonuses and hold back on dividend increases and buybacks, as the second-largest U.S. bank grasps for ways to boost its capital levels.
Some of the most drastic measures have been at the banks bailed out in the crisis, like Royal Bank of Scotland. The bank has capped cash bonuses at 2,000 pounds ($3,200) for the second year running, although last year some staff were able to convert some of their shares given into cash as early as June.
But pay in the industry may still not fall as hard as revenues.
Analysts at JPMorgan forecast that revenue across the investment banking industry — excluding JPMorgan itself — will fall 11 percent between 2010 and 2011. However, compensation is forecast to fall less far, pushing up the industry's compensation ratio to 46 percent, from 42 percent in 2010.
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