Given the present conditions, the bank’s top management could once again forego their yearly bonus. According to Deutsche Bank’s retail chief, interest rates in the Eurozone could be hovering around the 1% mark after 3 years.
Christian Sewing, Deutsche Bank’s head of retail banking has reportedly told German newspaper Bild that the bank’s top management should continue the waiver of executive bonuses for this year too.
“What’s clear is that if we don’t pay our shareholders a dividend, then our own bonus must be put up for debate,” said Sewing.
Deutsche Bank, Germany’s biggest lender, had earlier warned that it will have to undertake cost cutting measures for a turn around since revenues and profits have fallen to new lows midst growing market challenges, which includes a regime of low interest rates.
In 2015, Deutsche Bank’s top management had denied themselves of bonus payments.
Sewing went on to say that although the bank is not under any pressure to divest any of its divisions, there is a very real possibility of it selling Postbank, its retail banking unit. However that decision will be only when the price is right.
“The price must be right,” said Sewing. “We can wait.”
Earlier last year, Deutsche Bank had said it wanted to sell Postbank, so as to free up regulatory capital, however, according to John Cryan, Deutsche Bank’s Chief Executive, given the current environment of the capital market, it would be challenging to do so.
Sewing has ruled out the possibility of the bank imposing penalty interest on private customers. Incidentally the ECB has kept the refinancing rate at 0% while keeping the bank’s overnight deposits in the negative territory.
Hinting at the severity of the current environment, Sewing has said that many German banks will be forced to raise their accounts maintenance charges, without going into specifics.
He went on to add that the low interest regime could last for another 3 years in the Eurozone, after which it’s likely that interest rates could rebound to at least 1% if not higher.
Although Deutsche Bank’s metrics in last month’s banking stress test was less than optimum, Sewing said the bank’s footing is on solid grounds.
“Our capital is sufficient and satisfactory,” said Sewing. “The question of a capital increase is not an issue at the moment.”
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