FRANKFURT (Reuters) - Deutsche Bank (DBKGn.DE) will pay co-Chief Executives Anshu Jain and Juergen Fitschen 4.8 million euros ($6.2 million) for 2012, docking pay after the bank was forced to restate its earnings due to additional legal provisions.
“This is significantly below the European average,” chairman Paul Achleitner said at a press conference about pay reform at the lender on Friday.
Upon being asked whether pay had been adjusted to reflect Deutsche Bank’s restated 2012 results, which were revised downward because of a 600 million euro increase in litigation provisions, Achleitner said, “Naturally.”
Europe’s biggest bank by assets this week increased litigation provisions to 2.4 billion euros, forcing it to correct a January 31 earnings report which already showed the worst quarterly loss in four years.
For 2011, Jain received 9.8 million euros and Fitschen 4.2 million euros in variable and fixed pay, and long-term incentives.
The management board as a whole will receive 26.3 million euros ($34 million) in fixed and variable pay for 2012, down from 40.1 million euros in the year-earlier period, Achleitner said.
The amount includes a fixed and a variable component, Achleitner said, adding that the variable component will be awarded in shares which cannot be paid out for five years.
Achleitner declined to say whether Deutsche Bank would raise fixed salaries in response to European Union rules that seek to put a cap on bonuses.
On Friday the bank’s independent pay review committee said Europe’s banks would likely raise fixed salaries if European Union rules put a cap on bonuses.
Juergen Hambrecht, a former BASF chief executive, who heads the panel said: “European rules are more stringent than in the U.S. and Asia. This has consequences. A raising of fixed salaries is one of them.”
Raising base salaries for management board members and senior executives is one of the only ways to remain competitive, when compared with banks which are not impacted by E.U. bonus rules, Hambrecht said.
European banks will still be at a competitive disadvantage because higher fixed salaries inflate the cost base, making it harder for banks to lower salaries in times of an economic downturn.
The committee’s recommendations are non-binding.
Reporting By Edward Taylor; editing by Victoria Bryan