Deutsche Bank's results tomorrow will have an impact on its historic retention bonuses

In the mid to senior ranks of Deutsche Bank there is trepidation about tomorrow's fourth quarter results announcement. Not only will it become apparent how much money Deutsche Bank has allocated to bonuses for 2020, but recipients of John Cryan's ancient retention bonuses will discover whether they have a vestige of value.

As a reminder, former Deutsche Bank CEO John Cryan gave out special bonuses worth a combined €1.1bn to 5,522 of Deutsche Bank's most valued employees in 2017. Half were stock; half were cash. The stock component of those bonuses came with a serious catch: they would only pay out if Deutsche Bank's share price was above €23 in the first three trading weeks of 2021. Needless to say, Deutsche Bank's share price was below €10 in the first three trading weeks of 2021, so the stock component of Cryan's retention bonuses turned out to be worth nothing at all.

Fortunately, there's still the cash component. This vests both this year and next for senior Deutsche Bank traders and for other 'material risk-takers'. However, it too was contingent on a few things that will become apparent tomorrow morning.

For the cash element of Cryan's retention bonuses to pay out, Deutsche needs to show a profit both in the investment bank and across the group as a whole. If it doesn't, Cryan's deferred cash bonuses will also be worth nothing at all.

Deutsche Bank didn't respond to a request to comment on the perilous state of the payments, but the investment bank is pretty much guaranteed to reveal a profit for 2020. - It made €2.6bn of profits in the first nine months of last year. The group as a whole, however, is a bit more touch and go: profits for the first nine months were just €100m and could easily be wiped out by - say - a bad quarter in the capital release unit which is selling the illiquid securities Deutsche no longer wants on books.

Fingers crossed then.

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