* Commerzbank to appeal ruling
* Case may encourage other aggrieved bankers
By Kirstin Ridley
LONDON, May 9 More than 100 London-based bankers
scored a legal victory on Wednesday against Commerzbank
, Germany's second-largest lender, for slashing their
bonuses after huge losses at its former investment banking arm
during the financial crisis.
Commerzbank, which has twice been bailed out by taxpayers,
said it would seek leave to appeal after High Court Judge Robert
Owen ruled it had breached its legal duties by failing to honour
around 52 million euros ($66 million) of promised payouts.
The ruling flies in the face of government, public and
investor scorn at the size of bonuses paid despite disappointing
returns and billions spent by governments on rescuing
banks since the 2008 crisis. It could also open the way for
disappointed staff to sue other firms over payout disputes.
"We are disappointed with the court's decision and will seek
leave to appeal," a Commerzbank spokesman said in London. "It is
the bank's submission that there is every prospect that the
Court of Appeal would come to a different view on this matter."
Commerzbank had argued that its now integrated Dresdner
Kleinwort subsidiary was both justified and obliged to slash
2008 bonuses as losses spiralled to 6.5 billion euros and
threatened the survival of the business.
It went to the Court of Appeal last year in an attempt to
dismiss the case before it came to trial, but lost.
After a legal battle that has lasted more than
two-and-a-half years, lawyers for the 104 bankers urged
Commerzbank to draw a line in the sand.
"The bank acted in breach of contract and has now been
ordered to comply with its contractual obligations to pay," said
Clive Zietman, a partner at UK firm Stewarts Law, which is
representing the bulk of the claimants.
"The bank's actions were unwarranted and unfounded in law
... The bank should now do the honourable thing and bring this
matter to a close."
One lawyer said the case may set a worrying precedent for
other companies. "This decision is very bad news for employers,"
said Stefan Martin, employment partner at UK law firm Allen &
"Similar claims have failed in the past, but this decision
will give fresh encouragement to employees whose employer has
failed to deliver on employees' bonus expectations, even where
those expectations were created in the context of informal
Lawyers for the bankers said Commerzbank had already been
running heavy losses when it was warned by the British
regulator, the Financial Services Authority (FSA), to try to
avoid an exodus of staff which might destabilise it.
Under former investment bank head Stefan Jentzsch, Dresdner
Kleinwort set up a guaranteed minimum bonus pool of 400 million
euros to hold on to staff, and repeatedly told them -- sometimes
informally -- that this would be used to pay discretionary
A subsequent decision by Commerzbank, which bought Dresdner
Kleinwort in 2009, to slash payouts by 90 percent provoked the
largest group action of its kind at the High Court.
"It is a triumph where David has successfully taken on
Goliath and won, at least in this round of the battle," said Jo
Keddie, partner at law firm Winckworth Sherwood.
"This case has wider relevance to the financial sector since
banks and institutions facing liquidity problems or merger
scenarios in 2012 may well be required to honour pre-agreed
bonus terms and conditions," she added.
Commerzbank earlier on Wednesday posted a 63 percent drop in