[Photo: DB Building Fire, by Rob Vincent / Wikimedia Commons]

Deutsche Bank announced that it would "substantially limit" bonuses for senior employees in its 2016 payment structure after it finalized its $7.2 billion settlement with the U.S. Department of Justice related to the sale of mortgage bonds into the peak of the global financial crisis. The preliminary agreement to settle had been announced on 12/23/16.

DB’s statement included the following comments:

"Now that we have a clearer idea of the financial impact of the settlement with the U.S. Department of Justice and our performance for the year, we feel that tough measures are unavoidable. This is especially true at a time when thousands of jobs are being cut and our shareholders are not receiving an annual dividend."

 

"The Management Board has therefore decided to substantially limit bonus payments for 2016. In concrete terms, this means that employees with the corporate titles of Vice President, Director and Managing Director will receive the group variable compensation component but not any individual variable compensation component for the 2016 financial year."

Deustsche Bank had already cautioned that it would take a pre-tax charge of about $1.17 billion to its fourth-quarter results, which it will publish on 2/2/17, but didn't expect the settlement to have a material effect on its full-year performance. The bank had set aside about €6 billion for litigation reserves as of 9/30/16.