Bankers win in €50m Dresdner bonuses trial
MORE than 100 City bankers are set for a €52m (£41.8m) bonus payout after winning a landmark High Court case against their former employer.
Commerzbank was wrong to deny the payouts to 104 investment bankers at Dresdner Kleinwort, which it bought in 2009, Mr Justice Owen said. The ruling will send tremors through London and other financial centres, where the crisis has prompted a series of takeovers.
The ex-Dresdner bankers had demanded sums ranging from €15,000 to €2m, which were due to have been paid in January 2009. Commerzbank insisted the losses at its now integrated Dresdner subsidiary meant it was entitled to break its promise in an industry where “one’s word is one’s bond”.
After a legal battle lasting two-and-a-half years Commerzbank is set to fight on. It is seeking leave to appeal.
The trial heard Dresdner had set up the €400m guaranteed retention pool as bankers jumped ship to Goldman Sachs, Citigroup and Unicredit/HVB as markets slumped in late 2008. The gradual exodus meant the FSA was “breathing down its neck” about the effect of a possible disorderly breakdown of Dresdner Kleinwort, said Andrew Hochhauser, QC, for 21 bankers.
Martin Blessing, chief executive of bailed-out lender Commerzbank, claimed it was “necessary” to break its promise, made at a town hall-style meeting in August 2008, and to use the “material adverse change” clause. However, Stefan Jentzsch, then chief executive of Dresdner Kleinwort Investment Bank, said in 2008 the cash would be paid “no matter what”.
Yesterday Jo Keddie, head of employment law at Winckworth Sherwood, said: “Banks will in future be held to account… It is a triumph where David has successfully taken on Goliath and won, at least this round of the battle.”
Commerzbank, which the court heard had run up £4m of legal costs by January, said it was “disappointed”, adding: “The decision to reduce discretionary bonuses in light of €6.5bn of losses at Dresdner Kleinwort for 2008 was responsible and justified.”