250 Dresdner Kleinwort bankers are preparing legal action to recover tens of millions of pounds of bonus payments
As many as 250 Dresdner Kleinwort bankers are preparing legal action to recover tens of millions of pounds after the German bank’s new owner reneged on bonus payments.
Several of the bankers, who worked for Dresdner Kleinwort in the City of London until it was sold to Commerzbank in September, are claiming bonuses in excess of £1 million with the disputed payments totalling around £50 million.
The bankers, which have hired two London law firms, argue that their bonuses were ring fenced as part of the €5 billion Dresdner takeover and should not be affected by subsequent losses or changes in ownership.
But Commerzbank, which is a quarter owned by the German government after receiving an €18 billion rescue package, said last week that it would only pay bonuses to bankers with contractual guarantees.
Like other part-nationalised banks, Commerzbank, which posted a €6.3 billion loss for 2008, is under intense political pressure to trim – or abandon bonuses.
The London bankers are being advised by law firms Mishcon de Reya and Manches. Both firms confirmed they were representing Dresdner Kleinwort employees but declined to comment further.
The dispute is unusual because Allianz, the German insurance company that sold Dresdner to Commerzbank, set aside a €400 million bonus pot for Dresdner Kleinwort employees as part of the deal.
Commerzbank declined to comment saying it had not received any notice of litigation.
Sources close to the bank stressed that Dresdner employees were warned in December that the level of their bonuses were subject to change.
News of the lawsuit comes amid a global furore over bonus payments at state-owned banks that politicians have called “rewards for failure”.
Today, UKFI, the group responsible for managing the UK government’s stakes in stricken banks, said it was examining whether it could take legal action to withdraw Sir Fred Goodwin’s £650,000 pension.
Gordon Brown has said the Government would aggressively pursue action to ensure that rewards for bankers would be based on long-term success, with penalties for those that failed.
Last month Angela Merkel, the German chancellor said it was “incomprehensible” that Commerzbank and other institutions that had received state out should pay bonuses.
This morning Martin Blessing, Commerzbank chief executive, said the bank could not rule out having to tap the government for further cash.
March 3, 2009
Michael Herman
Source: Times Online