Deutsche Bank has told its staff that their bonuses for the past year would be cut in half to help compensate for the $7.2 billion it has agreed to pay over its role in selling toxic mortgage backed securities.
A day after the U.S. Justice department said it had reached a settlement with Germany’s largest bank, chief executive John Cryan wrote to staff saying cuts were inevitable.
“Now that we have a clearer idea of the financial impact of the settlement with the U.S. Department of Justice and our performances for the year, we feel that tough measures are unavoidable,” he said in a a letter he co-signed with other members of the bank’s management board.
On Tuesday United States Attorney General Loretta Lynch accused Deutsche Bank of contributing to the 2008 financial crisis, as she announced the details of the settlement.
Some of the bank’s biggest shareholders spoke of an “overdue signal” of remorse that will be necessary if Deutsche Bank wants to win back the confidence of investors and customers.
But the bonuses are far from the only problem that has been bothering investors.
Deutsche Bank is still struggling to come up with a viable strategy for the future and will likely have no other option than to ask employees to make further sacrifices.
For weeks, Deutsche Bank’s management board has been working through various options to soften the blow of the hefty settlement. Those options range all the way from reintegrating its subsidiary Postbank to downsizing the bank’s U.S. operations.