Moment of truth fast approaching for Deutsche Bank bonuses
This time next week, it will be done. Deutsche Bank's fixed income traders will have been informed of their bonuses. There is much room for disappointment in the process.
As we have variously noted, Deutsche Bank's fixed income traders had a great 2022: fixed income sales and trading revenues at the bank were up 22% year-on-year, and in the fourth quarter in particular, rates trading revenues alone were up 400%.
If this sounds like a recipe for bonus excitement, it is. Fuelling the fire, in January 2023 Bloomberg reported that Deutsche Bank's traders will probably be getting higher bonuses than for 2021.
There is, however, still room for disappointment, particularly in credit. Deutsche Bank's credit sales and trading revenues fell YoY in Q4 as the bank failed to earn revenues comparable to those generated by a lucrative distressed debt position in the fourth quarter of 2021. There are also fears that last year's abundant hiring of senior people from Credit Suisse's credit trading team (Johnny Moore, Diego Discepoli and others) will deplete money that could have been paid to existing DB staff.
It doesn't help Deutsche traders' case that fixed income professionals who've already been paid at US banks were typically down a lot. Headhunters say this has taken the pressure off Deutsche Bank to pay as well as it might have done next week. So too has the anticipation around the new team from Credit Suisse: "You might see some disgruntled members of the old guard leaving, but a lot of people there are excited about what will happen with flow credit under Johnny Moore, who is seen as a very decent guy," says one headhunter, speaking off the record.
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