Morning Coffee: Deutsche Bank says it's increasing bonuses too, but wait. JPMorgan admits its offices aren't ready for 5 days a week

Amidst the mass of uncertainties afflicting the world at the start of 2025, one looms larger than the rest: will this year be a big year for Deutsche Bank bonuses? Like everyone else in the market, Deutsche Bank people are wildly optimistic. Now Deutsche Bank has moved to put some of that optimism back in its box. 

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Bloomberg has spoken to people "familiar with the matter" and it reports that Deutsche Bank plans to increase bonuses in its investment bank by 10% this year. Deutsche Bank itself isn't commenting. 

Deutsche Bank people might be happy, or not. 

A 10% bonus increase would put Deutsche in line with the increase Bloomberg says is coming at Bank of America, but below the 15% bonus increase Bloomberg says is coming at JPMorgan. A 10% increase would also be below the unlikely 48% bonus rise Deutsche Bank people told us they're expecting. But at least it's a rise.

Will it be enough to fend off disgruntlement? As we noted last Friday, Deutsche Bank people have good reason to feel hopeful after their revenues in M&A, equity capital markets and debt capital markets increased by 58%, 69% and 57% respectively year-on-year in the first nine months of 2024. They also have reason to be hopeful after last year's bonus round at the German bank was the worst for three years for the rank and file at the investment bank.

Deutsche faces a difficult juggling act. Even if the average bonus at Deutsche Bank increases by 10% for 2024, it will 'only' reach €123k, which would still be far below the €139k paid in 2020. It would be the second worse bonus for four years, despite the impressive performance of Deutsche's investment bankers and a strong year for its credit and FX traders.   

Deutsche Bank's fundamental problem is that it's hired a lot of new people. After a senior banker hiring spree that included the addition of more than 100 investment bankers in the 18 months to June 2024, its revenues may have risen, but the productivity per head of its bankers is unusually low. People may feel that they deserve higher bonuses, therefore, but Deutsche may be unable to pay them. This could be difficult as senior bankers who were on guaranteed bonuses last year face reality this year. In the circumstances, signalling that bonuses will rise by 10% on average looks like damage control more than anything else. 

Separately, JPMorgan people have had a summons to return to the office five days a week, but it's not as simple as all that. 

Citing JPMorgan's own memo, Bloomberg notes that JPMorgan is telling people that, "it will take us some time to get all of our locations ready to accommodate a five-day-a-week schedule." 

This will probably be welcome to JPMorgan employees. Reuters reports that they complained so bitterly about the full-time return to the office on the company intranet that the relevant page was locked.

Meanwhile...

Deutsche Bank is also changing the way it allocates bonuses. It used to rate employees from one to three. Now it will rate employees from one to five and give greater weight to "teamwork" and other nebulous metrics. (Bloomberg) 

The two top executives at energy trading house Mercuria shared $1bn in dividends last year. This probably explains why the former head of Macquarie's commodities business went there. (Bloomberg) 

Point72 Asset Management generated a return in 2024 of about 19% in its flagship fund. This was better than Citadel and Millennium's performance for the year. (WSJ) 

Historic fintech IPOs have not thrived. Robinhood has tripled in value over the past 12 months, but is still barely above its IPO price. Affirm is trading above its IPO price, but is down 40% since the close of its first day of trading. (Financial Times) 

Private equity firms have been busy in Europe. $133bn of large deals were struck on the continent in 2024, a 78% increase on the previous year. Globally, the increase was just 29%. Private equity firms are buying big firms in Europe at depressed valuations. (Financial Times) 

Meta is cutting its DEI program and ending its 'diverse slate' approach to hiring, which ensures a range of diverse candidates are put forward for each position. (Axios) 

JPMorgan is running its pharmaceutical conference amidst greatly increased security. San Francisco’s police department has cancelled all time off for its officers during the conference, with police set to be stationed at the hotel and other event locations in the city. (Bloomberg) 

If you drink coffee in the morning, you're less likely to die. (European Society of Cardiology) 

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