The German banking giant Commerzbank has expressed anger after the Court of Appeal upheld a decision that more than 100 London investment bankers should receive €52m (£44m) in unpaid bonuses.
Commerzbank responded in unusually strong language, saying it was “disappointed” at the “regrettable” ruling. “In other jurisdictions, national courts upheld Commerzbank’s position,” said the bank, noting how a court in Germany rejected a similar claim, while Italian and Japanese courts have also been more favourable.
Commerzbank said it was particularly surprised given “the ongoing regulatory, public and shareholder calls to establish a sound relationship between banks’ performance and variable remuneration”.
The 104 bankers said they were given a guarantee about their bonuses at a meeting with the senior management of their then employer, Dresdner Kleinwort, in August 2008.
Commerzbank bought Dresdner soon afterwards and insisted that the bonuses were “provisional”, arguing that it was “reasonable and rational” to cut them by 90 per cent as the bank made a huge loss.
The bankers sued and have won at every turn since, with the Court of Appeal upholding the verdict last May of the High Court. Several bankers are in line for at least £1m each.
Clive Zietman, the head of commercial litigation at Stewarts Law, which acted for 83 of the bankers, said: “This is not just a victory for my clients. It is a triumph for common sense and for some very well-established principles of English contract law. It is a great pity that the bank saw fit to contest so vigorously and for so long, a case that could so easily have been avoided.”
Mishcon de Reya acted for the other 21 bankers.
The German bank, which is advised by the City solicitors Linklaters, is “considering its legal options”, which could involve going to the Supreme Court.
Paul Quain, a partner at GQ Employment Law, said: “The High Court ruling was quite radical and I’m surprised that it’s been so strongly endorsed by the Court of Appeal. This is going to cause significant problems for financial services employers. This ruling confirms that banks need to be extremely cautious when communicating with staff about their pay and bonuses, even in an informal manner.”
Another law firm, which did not wish to be named, said: “Employers should closely review the wording of any express power to make unilateral changes to terms and conditions of employment contained in employees’ contracts.”
Dresdner Kleinwort’s use of the company intranet to broadcast the “town hall” meeting in August 2008, when the decision was made to guarantee bonuses, also proved crucial. The court ruled this broadcast supported the case of the 104 bankers. Legal observers suggested that employers will need to be more careful about communicating online with staff orally, even when no written record is kept.
See you in court: The bonuses dispute
Bankers in London say Dresdner Kleinwort guarantees them a €400m (£340m) bonus pool. In the same month, Commerzbank agrees to buy Dresdner from Allianz for €9.8bn
Commerzbank cuts bonuses
Dozens of Dresdner bankers sue
High Court hearings; Commerzbank loses the case
Commerzbank is given the go-ahead to appeal