LONDON, March 5 (Reuters) - Commerzbank struck an upbeat tone at its appeal on Tuesday against a court order to pay 104 London-based bankers 52 million euros ($68 million) in bonuses.
At the start of three-day Court of Appeal hearing, Germany’s second-largest lender said it was confident of overturning last May’s High Court ruling that it breached its legal duties by failing to honour promised payouts.
“The bank will argue that the correct interpretation of the relevant law means that there was never a binding contractual agreement,” a spokesman said.
The three-year legal battle shines a light on a bygone era before political and public scorn became focused on fat banker bonuses, blamed for encouraging a culture of risk that helped trigger the financial crisis and economic crisis.
Commerzbank argues it acted responsibly and reasonably when it slashed discretionary bonuses by 90 percent as the credit crunch sent losses surging in 2008 and put the future of its now integrated investment banking arm, Dresdner Kleinwort, at risk.
The bankers, whose claims range from around 15,000 euros to 2.6 million euros, argue that Commerzbank reneged on contractual promises and that heavy losses at Dresdner Kleinwort had been well known when their bosses made and repeated bonus pledges.
The dispute hinges on whether these promises are binding and enforceable, whether Commerzbank was entitled to make 2008 awards dependent on bank performance after buying Dresdner in 2009 -- and whether it could subsequently slash some bonuses legally.
Commerzbank was forced to take its case to the Court of Appeal directly after High Court Judge Robert Owen refused to allow the appeal last May, saying the bank had acted in a “highly reprehensible” manner.
He further enraged the bank by suggesting it had sacrificed the contractual rights of its employees “on the altar of public perception” after being forced to seek a government bailout following the Dresdner deal.
The Court of Appeal is expected to publish its judgment in around eight weeks.
Commerzbank’s Chief Executive Martin Blessing said last month he would waive his 700,000 euro bonus for 2012 as the slowing economy, stiff competition, a raft of new regulations and stringent cost cuts eat into earnings.