Marcus Evans Group | Worldwide Headquarters | American Offices | Latin America | European Offices | African / Asian Offices

Bankers go to appeal court to claim €50m bonuses from 2008

Former London employees at Dresdner Bank say they received only 10% of money promised before banking crash

More than 100 former employees of Dresdner Bank, based in London, will go to court next week to demand the payment of €50m (£41.5m) in bonuses they claim they have been owed since soon after the 2008 banking crash.

The dispute with Germany’s Commerzbank, which took over the smaller Desdner Bank, involves some former bankers seeking more than €1m each. The judge is due to start reading documents on Monday, and the four-week hearing will begin formally on Wednesday.

The row dates back to 2008 when Allianz, then the owner of Dresdner Bank, decided to separate the investment banking side of the business from the commercial banking operations as a prelude either to selling the investment banking business or winding it down.

This, according to lawyers for the bankers, “resulted in the risk of a devastating mass exodus of key personnel and caused the Financial Services Authority to place it under close scrutiny”. Those fears spawned a costly retention scheme at the heart of the legal row.

Solicitors for Stewarts Law, who represent more than 80 of the bankers, say the Dresdner board, in consultation with the FSA, established a staff retention plan with a guaranteed minimum bonus pool of €400m to be shared out based on individual performances.

Submissions from the law firm Mischon de Reya, which represents the remaining 21 claimants, insist these were “binding promises” and not simply “statements of present intention which could be abandoned at will or subjected to unheralded conditions thereafter”. They were due to be paid in cash in early 2009.

One internal memo from summer 2008, included in the evidence, shows that an “incentivisation and compensation” proposal sent to Dresdner Bank’s executive committee said it was “imperative” that employees and management knew bonuses would be available.

In the end, however, Commerzbank – which took over Dresdner Bank in late 2008 – decided not to pay any bonuses that year because of its overall losses. The claimants subsequently received 10% of their intended bonuses. Commerzbank, 25% owned by the German government, is trying to raise €5.3bn to plug a capital gap identified by the European Banking Authority.

Asked what those outside the banking world would make of the belated request for bonuses during a time of high unemployment, Clive Zietman, of Stewarts Law, said: “This case is about English contract law, not about politics. The same principle would apply if an employer promised something and then changed his mind.”

Commerzbank tried to have the claim struck out at the court of appeal last year, but failed.A spokesperson for Commerzbank said: “During the forthcoming trial, [we] will show that Dresdner Bank was entitled to reduce its employees’ 2008 discretionary bonuses in the light of the dramatic deterioration in the investment bank’s performance in late 2008.

“As the new owner of Dresdner Bank, Commerzbank plans to mount a vigorous defence to all the claims made against it.” © 2012 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds