Banking Crisis

No Bonuses, Salary Freeze at Kleinwort Benson

Wendy Spires Assistant Editor 19 February 2009

No Bonuses, Salary Freeze at Kleinwort Benson

No bonuses for 2008 will be paid to the employees of Commerzbank and its subsidiaries, including UK private bank Kleinwort BensonWealthBriefing understands. Meanwhile, a salary freeze will be imposed at Kleinwort Benson this year.

Martin Blessing, chairman of Commerzbank’s board of managing directors, and chief financial officer Eric Strutz, are understood to have said that the decision applies to “all members of the executive board, executives and staff members at Commerzbank AG in Germany and abroad.”

“After an intense round of discussions, the boards of Commerzbank and Dresdner Bank decided in favour of a policy as uniform as possible for the two banks and their subsidiaries,” they are understood to have said.

While Commerzbank reported earnings that were “still respectable” for the first half of 2008, it posted an operating profit of minus €378 million ($474 million) for the year; negative numbers are also expected from Dresdner Bank for the year, WealthBriefing understands.

As profit targets were not met, employees will not receive any performance-related or profit-sharing benefits.

Some Commerzbank businesses, such as Kleinwort Benson, were profitable in 2008.  But Commerzbank is understood to have emphasised that the individual segments of the business cannot be viewed in isolation.  

Kleinwort Benson, which is owned by Dresdner Bank, has now gone on record in a statement saying that none of its employees will receive a bonus for 2008, and that no salary increases will be made this year.

“Commerzbank has reached this tough decision with a great amount of soul searching, but as the figures simply don’t add up and no dividend is being paid to shareholders, no bonuses or salary increases can be made until the performance across the organisation improves,” said Robert Taylor, chief executive of Kleinwort Benson.

Mr Taylor added that, as part of the larger Commerzbank group, Kleinwort was obliged to support its need.  “I would hope that ultimately the entire team at Kleinwort Benson affected by this decision will be proud to be part of an organisation that has a high level of integrity, and corporateresponsibility, and one which is doing its utmost to strengthen the organisation for the future,” he said.

Dresdner Bank was sold by its German parent, Allianz, to Commerzbank, with the sale completed in January.    

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