Barclays, Deutsche Bank to cut pay up to 20%

Updated 15 January 2013
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Barclays, Deutsche Bank to cut pay up to 20%

FRANKFURT/NEW YORK: Barclays and Deutsche Bank will take a knife to bonuses for investment bankers in the coming weeks as they seek to tackle high costs, people familiar with the matter said.
Britain’s Barclays is finalyzing bonuses for last year and overall 2012 compensation for investment bankers will fall by between 10 percent and 20 percent on average, two sources said.
New Barclays CEO Antony Jenkins is revamping the bank and has pledged to cut pay to lift returns for investors.
Deutsche Bank’s investment bankers will see bonuses for 2012 fall by 15-20 percent, resulting in a similar cut for overall pay for the year, two sources said.
The reduction follows a year of restructuring at Germany’s flagship bank and pressure from regulators to clamp down on short-term rewards that can encourage risk taking.
Barclays and Deutsche Bank, regarded as Europe’s most successful investment banks, declined to comment.
Banks around the world are taking a harder line on pay and are axing jobs as they get to grips with high costs and tougher rules that have made them less profitable than in the past.
European lenders are expected to cut more aggressively as their regulators apply more pressure.
Bonuses across the industry for 2012 could be down by as much as 30 percent from 2011, senior bankers say.
Credit Suisse is also set to cut its bonus pool for 2012 by one fifth, the fourth year in a row the Swiss bank has slashed payouts, a newspaper reported on Sunday.
Bank executives have put their staff on alert for lower pay for some time.
Deutsche Bank co-Chief Executive Anshu Jain, who previously headed its investment bank, said in September the payout ratio — the proportion of net revenues set aside for banker pay — would come down.
Barclays’ Jenkins, who took over in August after predecessor Bob Diamond quit when the bank was fined for rigging Libor interest rates, aims to cut compensation in his investment bank to 39 percent of its income for 2012, one of the sources said, down from 47 percent in 2011.
He is also expected to cut up to 3,000 investment bank jobs as part of a restructuring to be unveiled on Feb. 12. Staff are expected to be told their pay in early February.
Jenkins told analysts in October he was “acutely aware” that investors and others wanted pay to come down, and said Barclays’ compensation/income ratio would be in the top quartile.
“We are on a path to continue to drive this ratio down, but always with an eye to being competitive,” he said.
That could see the pay of top rainmakers stay flat or increase slightly on the year while the earnings of weaker performers could slide by up to 40 percent, one of the sources said.
US rival J. P. Morgan last year paid out 34 percent of its investment banking income to staff and is considered the best among major firms.
The ratio averages about 45 percent in investment banking, although the ratios are not always comparable. It is estimated to be about 48 percent at Deutsche Bank and more than 50 percent at Credit Suisse and UBS.
Bonuses awarded in the coming weeks could be affected by the hefty fines and compensation bills for mis-selling in the past year.
Some of Barclays’ bonus pool could be used to pay the bank’s 290 million pound fine for Libor manipulation and Royal Bank of Scotland is considering cutting its bonus pool to contribute to a pending Libor fine.


Kobe Steel posts first profit in three years despite data fraud scandal

Updated 27 April 2018
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Kobe Steel posts first profit in three years despite data fraud scandal

TOKYO: Kobe Steel, Japan’s third-biggest steelmaker, on Friday posted its first annual profit in three years, even after admitting to falsifying quality data, a scandal that affected hundreds of customers and hit Japan’s manufacturing prowess.
Kobe Steel reported profit of ¥63.19 billion for the year ended March 31, against a loss of ¥23.05 billion a year earlier.
The result was above its own forecast of ¥45 billion and an estimate of ¥49.56 billion among seven analysts surveyed by Thomson Reuters.
The company predicted a ¥45 billion profit for the year to March 2019, compared with a mean profit forecast of ¥44.62 billion from six analysts.
Kobe Steel, which supplies steel and aluminum parts to manufacturers of cars, planes and trains around the world, admitted to supplying products with falsified specifications to more than 600 customers and admitted the data fraud has been going on for nearly five decades.