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Deutsche Bank (DB) Might Raise 2020 Trading Bonus by 10%

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Deutsche Bank AG (DB - Free Report) is mulling to reward traders at its fixed income unit for a striking performance in the current year, despite the pandemic-related concerns. The bonuses are likely to be raised by about 10%, per an article by Bloomberg.

The company, at the beginning of December, revised its outlook upward for the investment bank unit as the bank’s profitability is highly dependent on the fixed-income trading business. Notably, the crisis has caused significant volatility in the market, aiding overall trading activities.

The bonus raise is likely to vary between individual traders and across trading units, with the debt traders and corporate finance employees bagging higher payouts, having boosted the investment bank considerably in the first nine months of 2020. Also, at the investor day, Deutsche Bank remarked that the strong volumes continued in the fourth quarter as well.

On the other hand, employees at the non-satisfactory performing segments such as private bank and corporate bank are likely to receive lower bonuses.

Despite this raise, the German lender expects the savings from prior headcount reductions and cuts to bonuses for other units will keep the total variable compensation lower than the last year’s level. Per people familiar with the matter, the decision is still not final and the bank could change the amount, the article reported.

Other banks are also undertaking similar actions. JPMorgan (JPM - Free Report) plans to boost year-end compensation for its sales and trading division by up to 20%. Bank of America’s (BAC - Free Report) senior executives are planning for year-end bonuses similar to the previous year.

Deutsche Bank had rolled out its restructuring moves even before the pandemic hit. In a bid to improve long-term profitability, last July, the bank announced a number of major restructuring plans and fresh set of targets it seeks to achieve by 2022 without raising additional capital.

The stock has gained 16.4% on the NYSE in the past six months compared with the industry’s growth of 26.6%.

Deutsche Bank currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

A better-ranked stock in the same space is UBS Group AG (UBS - Free Report) . The company has witnessed 19.7% upward earnings estimate revision for the current year in the past 60 days. This Zacks Rank #2 (Buy) stock has gained 24.9% over the past six months.

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