Just five months into the job, John Cryan has gained a reputation for being honest and plain speaking – and this week, he declared at an academic conference at Goethe University in Frankfurt that bankers, including himself, are paid too much. Naturally, this has got the media talking.
His pronouncement came against the backdrop of Deutsche Bank’s cost-cutting plan, which is rumoured to include a reduced bonus pool for its investment bank staff by €500m, or almost a third. We will have to wait until the first quarter of 2016 to see whether this prediction bears fruit, but some commentators believe that British-born Cryan has “fired a warning shot”.
Unwarranted entrepreneurial pay?Nicholas Comfort at Bloomberg Business reported on the Frankfurt conference, where Cryan said bankers were still paid too much and often promised bonuses too quickly. “Many people in the sector still believe they should be paid entrepreneurial wages for turning up to work with a regular salary, a pension and probably a health care scheme and playing with other people’s money,” Cryan said. “There doesn’t seem to be anything entrepreneurial about that except the compensation structures.”
He also took issue with the idea that more money motivates people to do a better job: “I don’t fully empathise with anyone who says they turn up to work and work harder because they can be paid a little bit more, but that may be a personal view. I’ve never been able to understand the way additional excess riches drive people to behave differently.”
He included his own pay in the criticism: “I have no idea why I was offered a contract with a bonus in it, because I promise you I will not work any harder or any less hard in any year, in any day, because someone is going to pay me more or less.”
BloombergBusiness report
Lean ChristmasOver at The Guardian, Sean Farrell drew on Bloomberg’s report, with a quote from Jason Kennedy of recruitment firm Kennedy Group. “With continuous and unforeseen fines, [Deutsche Bank’s] first priority is to build capital rather than pay their employees. By saying what [Cryan has] said, Christmas has been cancelled,” Kennedy declared.
Farrell noted that Deutsche Bank won’t be paying a dividend this year or next and that it may also cut a minimum of 8,000 jobs in the short to medium term.
It’s all part of the bank’s plan to plug the gap in its coffers, and while cutting the bonus pool will help, it also seems to be a matter of principle for Cryan. “We should reflect on people’s contribution over a much longer period of time than one year,” he said. Referring to clawback, he added that there is a “promise to pay first and then be in the ridiculous position where the baby’s been given the candy and you’ve got the difficulty of taking it away”.
The Guardian report
Cryan’s clawsAt Reuters, Jonathan Gould also mentioned the issue of clawback. He explained that Cryan wanted “banks … to improve governance and controls and take away the incentive to act unilaterally … Bankers ought to be paid less and should have variable pay paid over a longer period of time – and clawed back if needed.”
Gould also noted that Cryan said he is “100% in favour of clawback”.
Reuters report
Seen a blog, news story or discussion online that you think might interest CISI members? Email joanna.lewin@wardour.co.uk