Claw-back bonuses

Refund, Please!

  • Why it matters

    Why it matters

    The new plans are designed to discourage excessive risk-taking and improve the image of a financial sector that has fallen into disrepute over the past few years.

  • Facts


    • Under a new compensation directive, banks can demand repayment of bonuses from executives in full or in part under certain conditions.
    • The directive, known as a clawback rule, will require banks to demand repayment of bonuses if recipients have seriously violated internal or external rules.
    • The 2008 financial market crisis led to a fundamental change in the extent to which regulators are entitled to influence manager compensation.
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Film Review-The Big Short
Arrogant bankers. "The Big Short" drew attention to the actions of bankers in the run-up to the financial crisis, which was partly caused by bonuses. Source: AP

Josef Ackermann hasn’t exactly been free of controversy over his long banking career. The former head of Deutsche Bank is perhaps most famous in Germany for a picture of him brandishing a victory sign at the start of a trial into improper meddling in a company merger. The picture became a symbol here of the worst side of capitalism.

And so it wasn’t particularly surprising when Mr. Ackermann triggered a new wave of indignation toward the end of last year. At an event in Berlin, the investment banker said he didn’t see why he should relinquish portions of his bonuses, even if his former employer, Deutsche Bank, is in dire straits these days – the result of a crisis partly of his own making.

The troubles at Deutsche Bank have already forced his successor John Cryan to crack down on bonuses at Germany’s largest bank. Mr. Ackermann, who led the bank from 2002 to 2012, also said that he saw “no legal basis” for the bank to make retroactive claims on his bonuses.

That may be about to change. Germany’s top financial regulator, known here as BaFin, has announced a tightening of the rules when it comes to banker bonuses – basically freeing up employers to go after their top executives when they’ve done something wrong.

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