Commerzbank Chief Gives Up Bonus Amid Lackluster Results
FRANKFURT — The chief executive of Commerzbank, one of Germany’s largest banks, on Friday became the latest in a series European bank leaders to recognize that collecting a big bonus might appear unseemly while banks struggle with layoffs and financial losses.
The chief, Martin Blessing, said Friday he would not take a bonus for 2012, after the bank reported a net loss of 716 million euros, or $ 959 million. in the fourth quarter. Other Commerzbank executives will also take steep cuts in their bonus pay, the bank said.
However, Mr. Blessing still collected a substantial raise for last year because his salary was no longer restrained by the terms of a government bailout in 2008. His base pay increased to 1.3 million euros, or $ 1.7 million, from 500,000 euros, the limit set by the government and then voluntarily extended by the bank.
Commerzbank, which is still 25 percent owned by German taxpayers, continues to struggle with bad investments made before the beginning of the financial crisis. The bank has said it would cut 4,000 to 6,000 jobs by the end of 2016.
Other bank chief executives have made similar gestures to give up bonuses. Antony P. Jenkins, the new chief executive of Barclays, said this month that he would forgo his bonus, which would have been £2.75 million on top of his £1.1 million salary. The British bank has struggled to rebuild its reputation after recent missteps.
Stephen Hester, the chief executive of the Royal Bank of Scotland, refused a bonus of £963,000, or $ 1.5 million, for 2011. But he will receive up to £7 million for 2012, including pension contributions and long-term investment deferrals, in addition to his £1.2 million salary, according to recent testimony.
Commerzbank had disclosed this month that it would have a quarterly loss, but offered more details about its earnings on Friday. Net profit for 2012 fell to 6 million euros from 638 million euros a year earlier, as the bank booked losses related to the sale of a unit and a recalculation of its tax liabilities.
Without those one-time items, net profit from the year would have been 990 million euros, the bank said.
Commerzbank said it increased the amount it set aside to cover bad loans in 2012 to almost 1.7 billion euros, from 1.4 billion euros in 2011. Most of the increase came from loans made to the shipping industry, which is in the midst of a severe downturn. Hundreds of ships are anchored idly in ports around the world because they lack customers, creating a severe burden for Commerzbank and other European lenders.
Mark Scott contributed reporting from London.