Commerzbank has gone to the UK’s High Court to strike out lawsuits brought by 104 investment bankers who claim they were entitled to receive millions of pounds in discretionary bonuses from a €400m ($520m) pool.
The bankers, who have brought their claims in two separate lawsuits, were all employed in 2008 by Dresdner Kleinwort’s investment banking division, which was taken over by Commerzbank last year.
The High Court heard on Tuesday that Stefan Jentzsch, then head of Dresdner’s corporate and investment banking arm, addressed a “town hall” meeting of bankers in August 2008.
Mr Jentzsch told employees there would be a “guaranteed minimum pool of €400m made available for staff bonuses” although there would be no individual guarantees, the court heard. Of the €400m pool, about €150m was subsequently paid out.
The bankers claim they received letters in December 2008 telling them about discretionary bonuses that they had provisionally been awarded.
However, they claim they later received a tenth of the bonuses they expected and allege the letters and “town hall” meeting gave rise to legally binding obligations by the German bank.
They have alleged that Dresdner’s €400m bonus pool put in place by then owner Allianz in mid-2008, ahead of its takeover, was to avoid a staff exodus from the investment bank.
Commerzbank asked the High Court for summary judgment on the grounds it believes the claims have no real prospect of success and the lawsuit should not proceed to a full trial.
Jonathan Sumption QC, representing Commerzbank, told the court that Mr Jentzsch’s comments were “a statement of intention and not a contractual obligation” and they “could not be regarded as conferring contractual rights on any individual employee”.
He told the court that “town hall” meetings could be attended by any Dresdner staff but no one was obliged to attend, suggesting it was not intended to have legal effect.
Mr Sumption told the court that the letters sent to the bankers in December 2008 informing them of the discretionary bonus, also made it clear that the award was subject to review in the event there were material deviations in Dresdner Kleinwort’s revenue and earnings for November and December 2008.
Some 83 of the investment bankers are being represented by Stewarts Law, with 21 by law firm Mishcon de Reya. The hearing continues on Wednesday.
Commerzbank said that it was defending the claims: “Dresdner Bank was entitled to reduce its employees’ 2008 discretionary bonuses in the light of the marked deterioration in the investment bank’s performance in late 2008.”