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As Deutsche Bank warns on bonuses, traders are leaving

If you thought this year's Deutsche Bank bonuses might be strong, then think again. Speaking today at Davos, Deutsche Bank CFO James Von Moltke intimated that bonuses might not be brilliant for 2023 after a "difficult year." Deutsche Bank's bonuses will "reflect performance," added Von Moltke. 

In some areas of Deutsche's investment bank, performance has not been good.

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Deutsche Bank doesn't report its fourth quarter results until February 1st. In the first nine months of 2023, its difficult areas included M&A, where revenues nearly halved and fixed income trading, where revenues fell 13% year-on-year. Deutsche said Q3 fixed income trading revenues were lower across rates, FX and emerging markets compared to a strong previous year. 

Slowing revenues in rates trading might be due to the market, but they could also be related to the departure of various Deutsche Bank rates traders. The exits last year included Kilian Frensch, who's gone to Nomura, Eren Ozgur, who's gone to hedge fund Alphadyne Asset Management, Josh Hooker, now at BlueCrest, and Daryl Li, at BlueCrest with Hooker. They were seemingly precipitated by the departure of head of rates trading Guy Winkworth, who went to Barclays in June. 

Deutsche's rates exits are, however, continuing. With only a few months before bonuses, Alessandro Iannelli, an inflation trader at Deutsche Bank, has just resurfaced at NatWest Markets in London. 

Inflation traders are seemingly in high demand, so Deutsche may not want to crimp its coming bonuses too heavily. Goldman Sachs has been bleeding its own London inflation traders to hedge funds like Millennium and DE Shaw and headhunters say the hiring market is hot. 
 
Last year, Deutsche Bank cut the bonus pool in its investment bank by 8% and paid its average material risk-taker €1.6m. This year, it seems the bonus pool may fall again. 
 
Not everyone will be sympathetic: Deutsche spent heavily to hire-in senior investment bankers throughout 2023 and doesn't yet have much to show for it. It also paid £410m for UK brokerage firm Numis and made Numis' founders very wealthy in the process. "I assume that the bonus cuts will go down well after all the Numis Ferrari headlines," observed a senior banker at a rival firm drily.
 

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AUTHORSarah Butcher Global Editor

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