* Barclays cut follows new CEO's pledge to reduce pay
* Deutsche bonuses to be cut 15-20 pct-sources
* Banks taking harder line on pay
* Also clamping down on rewards that encourage risk taking
By Philipp Halstrick and Soyoung Kim
FRANKFURT/NEW YORK, Jan 14 Barclays and
Deutsche Bank will take a knife to bonuses for
investment bankers in the coming weeks as they seek to tackle
high costs, people familiar with the matter said.
Britain's Barclays is finalising bonuses for last year and
overall 2012 compensation for investment bankers will fall by
between 10 percent and 20 percent on average, two sources said.
New Barclays CEO Antony Jenkins is revamping the bank and
has pledged to cut pay to lift returns for investors.
Deutsche Bank's investment bankers will see bonuses for 2012
fall by 15-20 percent, resulting in a similar cut for overall
pay for the year, two sources said.
The reduction follows a year of restructuring at Germany's
flagship bank and pressure from regulators to clamp down on
short-term rewards that can encourage risk taking.
Barclays and Deutsche Bank, regarded as Europe's most
successful investment banks, declined to comment.
Banks around the world are taking a harder line on pay and
are axing jobs as they get to grips with high costs and tougher
rules that have made them less profitable than in the past.
European lenders are expected to cut more aggressively as
their regulators apply more pressure.
Bonuses across the industry for 2012 could be down by as
much as 30 percent from 2011, senior bankers say.
Credit Suisse is also set to cut its bonus pool
for 2012 by one fifth, the fourth year in a row the Swiss bank
has slashed payouts, a newspaper reported on Sunday.
"ON A PATH TO CUT PAY RATIO..."
Bank executives have put their staff on alert for lower pay
for some time.
Deutsche Bank co-Chief Executive Anshu Jain, who previously
headed its investment bank, said in September the payout ratio -
the proportion of net revenues set aside for banker pay - would
Barclays' Jenkins, who took over in August after predecessor
Bob Diamond quit when the bank was fined for rigging Libor
interest rates, aims to cut compensation in his investment bank
to 39 percent of its income for 2012, one of the sources said,
down from 47 percent in 2011.
He is also expected to cut up to 3,000 investment bank jobs
as part of a restructuring to be unveiled on Feb. 12. Staff are
expected to be told their pay in early February.
Jenkins told analysts in October he was "acutely aware" that
investors and others wanted pay to come down, and said Barclays'
compensation/income ratio would be in the top quartile.
"We are on a path to continue to drive this ratio down, but
always with an eye to being competitive," he said.
That could see the pay of top rainmakers stay flat or
increase slightly on the year while the earnings of weaker
performers could slide by up to 40 percent, one of the sources
U.S. rival J.P.Morgan last year paid out 34 percent
of its investment banking income to staff and is considered the
best among major firms.
The ratio averages about 45 percent in investment banking,
although the ratios are not always comparable. It is estimated
to be about 48 percent at Deutsche Bank and more than 50 percent
at Credit Suisse and UBS.
Bonuses awarded in the coming weeks could be affected by the
hefty fines and compensation bills for mis-selling in the past
Some of Barclays' bonus pool could be used to pay the bank's
290 million pound fine for Libor manipulation and Royal Bank of
Scotland is considering cutting its bonus pool to
contribute to a pending Libor fine.