Deutsche Bank's Multimillion-Dollar Incentives Plan for Top Bankers

Strategic Insights -

Deutsche Bank's $9.67 billion purchase of Bankers Trust is expected to bring significant changes to the banking giant's investment arm. To secure the services of top executives from both companies, Deutsche plans to offer multimillion-dollar incentives, including at least $10 million to select bankers. The move aims to ensure the merged company's success and stability, particularly in the face of potential client defections and a late start in snaring new business.

Key Takeaways:

  • Deutsche Bank plans to offer multimillion-dollar incentives, including at least $10 million to select bankers, to secure their services in the merged company.
  • The largest financial incentives will be given to six Bankers Trust executives and three Deutsche executives, who will oversee the enlarged investment banking business.
  • The executives include Frank S. Newman, chairman of Bankers Trust; Mary Cirillo, who will run the global custody business; Yves de Balmann and Mayo Shattuck, who will jointly manage the new investment banking business; Ted Virtue, who will run corporate finance; and Robert Ferguson, who will supervise retail brokerage activities.
  • Josef Ackermann, Edson Mitchell, and Michael Phillip will oversee global debt trading, the equities business, and retail brokerage activities, respectively.
  • All of these executives will be members of the merged company's investment banking committee, supervised by Mr. Ackermann and Mr. Newman.
  • Deutsche Bank's past experiences with lucrative pay packages have been unsuccessful, with the bank being badly burned in its efforts to secure top investment banking talent.
  • The bank is expected to retreat from its policy of awarding bonuses in the form of Deutsche Bank shares.

Statistics:

  • The acquisition price is $9.67 billion.
  • At least $10 million in incentives will be given to select bankers.
  • 6 Bankers Trust executives and 3 Deutsche executives will receive the largest financial incentives.
  • 9,000 people are employed by the two banks in Britain.
  • The merged company will have about $850 billion in assets.
  • Deutsche Bank lost dozens of investment bankers earlier this year who specialized in high-technology businesses.

Sources:

  • "Germany's Deutsche Bank to Buy Bankers Trust for $9.67 Billion", The New York Times, [no date mentioned]
  • "Deutsche to Pay Cash for Bankers Trust, Raise Capital With Stock and Bonds", Bloomberg, [no date mentioned]