A group of 104 investment bankers that worked for now-defunct Dresdner Kleinwort in London have won a payout worth more than £40m from German banking group Commerzbank, bringing to an end a four-year legal battle over a refusal to pay bonuses.
The payout of €50m (£42m) awarded in the High Court is substantially lower than the €400m (£337m) bonus pool for the 2008 calendar year that the bankers had argued they were contractually entitled to.
They claimed the German lender was not adhering to a binding contractual promise following its takeover of Dredsner Kleinwort in 2008. The employees claimed they had been guaranteed a bonus pool by Stefan Jentzsch, then chief executive officer of Dresdner, earlier that year.
In early 2009 Commerzbank said it would slash bonuses by up to 90 per cent across the whole group following a series of high-profile failures, including Dresdner Kleinwort, that left the group requiring a government bailout totalling €18bn (£15.2bn).
The court heard that at a board meeting in December 2008, it was decided to introduce a ‘material adverse change’ clause into the bonus letters.
Mr Jentzsch had argued against the move and stated that there could be a €400m bonus pot, but Commerzbank argued that the bonus was not guaranteed and thus no pledge was broken.
The letters sent to all employees stated that the bonus payment will be “adjusted” if material negative deviations in the banking group’s revenue and earnings were established.
Commerzbank later said it was reasonable to reduce awards because of a €6.5bn (£5.5bn) loss at the division for 2008, while Commerzbank received a €18bn (£15.2bn) bailout by the German government in 2009.
Last year, Commerzbank told FTAdviser that it planned to “mount a vigorous defense” to all the claims made against it.
The claimants are fighting the claim on three issues, the first of which is whether the meeting constituted a “binding internal agreement”.
The judgement said: “There was an effective unilateral contractual amendment pursuant to clause 1.4 of the contract. But even if I am wrong about that, there was in any event a binding contractual promise resulting from the terms of the promise and the circumstances in which it was made.
“In the circumstances it is strictly irrelevant whether the introduction of the MAC clause constituted a breach of the duty of trust and confidence or not. However, in my view it did.”
In late 2009 the Dresdner branding was dropped and all remaining businesses came under the Commerzbank umbrella.
