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A total of 72 City bankers today sued for £30million in unpaid bonuses in the biggest lawsuit of its kind seen in London.
The current and former London staff of German bank Dresdner Kleinwort filed their claim in the High Court, arguing they have been paid only a tenth of the money they are entitled to.
The class action comes as the Government attempts to find ways of curbing banker bonuses blamed for contributing to last year's financial meltdown and the global recession.
Legal documents lodged at court provide an extraordinary insight into the scale of bonuses that were routinely paid in the City before the collapse of Lehman Brothers a year ago.
Eight of the bankers say they are owed more than £1 million each for their work last year.
The biggest single claim is from former senior options trader Jonathan Powell, who has demanded £1.46 million.
All but a handful of the remaining claimants, who worked at Dresdner's City HQ in Gresham Street, are seeking six-figure sums.
The bankers argue that Dresdner Kleinwort and its new owner Commerzbank, which bought the firm in January, have reneged on guarantees to pay their bonuses in full.
Commerzbank paid the 72 staffers 10 per cent of what they had been expecting, citing a “material adverse change” in economic circumstances as the bank ran up big losses in the credit crunch.
The aggrieved bankers are suing for the remaining 90 per cent plus daily interest.
Their claim in the High Court said Dresdner Kleinwort set aside a “guaranteed minimum bonus pool of 400 million euros” in August last year.
Dresdner's management made the commitment after the pressure from the Financial Services Authority.
The FSA had been anxious to prevent Dresdner staff from quitting as fears mounted for the stability of the banking system in the run-up to the collapse of Lehmans.
Clive Zietman, partner at Stewart's Law, who is representing the 72 bankers, told the Standard: “It is a straightforward and very strong case.”
He added that it would be wrong if Commerzbank refused to honour the bonus payments because of political pressure in Germany.
“This case is about English law and an English court will decide on that basis and will not be influenced by political issues,” said Mr Zietman, Commerzbank is being represented by one of the biggest City law firms, solicitors Linklaters.
A spokesman for Commerzbank said: “Dresdner Bank was entitled to take the actions it did. The bank will be defending these claims vigorously in the courts.”
Those close to Commerzbank insist the promise of bonus payments was always “provisional”.
But the 72 bankers say their part of the business was “extremely profitable” right up until the end of last year and “continues to be”.
Most of the 72 bankers are “front-office” staff — big earners, known as rain-makers, who generated profits and big fees.
They include global head of foreign exchange trading Richard Attrill, top foreign exchange traders Ian Robertson and Dominic Yip, head of energy trading Sergio Pagani and head of inflation trading Matthieu Robert.
Law firm Mishcon de Reya is understood to be acting for another large group of aggrieved Dresdner staffers.
Commerzbank has recently settled separate cases brought by four of the most senior Dresdner Kleinwort executives in London over bonuses.
Reader views (31)
In the old days people used to get commissions for their work pretty much the same as most salespeople in other industries. if you did well for your company you got paid if not not. it was contractually agreed and allowed firms to attract the best performers. that was changed to a discretionary bonus system to give the management of firms more flexibility to supposedly pay for future earnings which are more important to the banks than past earnings. of course in reality this also meant that management of the firms had more flexibility on whom to reward especially themselves, the managers. has anyone wondered why these 72 'top earners' are only suing for 30 million out of the 400 million set aside? who received the other 370 million? supposedly they made over 1 billion for their firm and it appears there are no losers amongst them. Percentage wise that seems to me to be a less than fair payout. If these guys were as good as they seem to have been, and as many of them have new jobs they must have been good then perhaps they helped buffer the Armageddon of the industry? Perhaps these guys achievement led to governments having to pay less bail out....Perhaps just perhaps they deserve to get paid and should not be shamed....
- Docdocson, london
sounds like Delilah actually understands the way Bonuses work.
there is no call for informed comment here in the cauldron of the ignorant.
- Scotty, london
here's the thing.
- these guys were profitable, they made money
- these bonuses were contractual
- the money was set aside and ring fenced.
not paying these bonuses is akin to stealing.
I appreciate some people might not understand this, but equally a lack of understanding has never been a barrier to comment before now...
- Scotty, london
Although the amount of money being discussed here is astronomical, I have the following Qs and points:
- how can Commerzbank justify breaking the contract citing “material adverse change” when the credit crunch started a year and a half before this bonus debacle?
- the article says it was our very own watchdog, the FSA, who asked for the EUR 400million to be set aside by Dresdner for staff retention. What did the Commerzbank fat cats do with the money that wasn't theirs to play with?
- If the traders did their job well and made Dresdner money in areas like FX, surely they deserve their bonus, like a salesperson deserves their commission. These bankers seem to be very separate to those who caused the recession by sub-pprime lending, why taint them with the same brush?
If I were in their shoes, I'd feel entitled to what was promised to me too. Good luck!
- Unemployed, London, UK
Should not be a problem with the Ace City Firm - Sue Grabbit & Run.
- William, Redhill Surrey
I still fail to see why a "bonus" should be an entitlement - didn't they have an agreed monthly salary? If it's a bonus then it's discretionary - even if they made good profits, they may have been due to dumb luck. In any case all these "profits" in my opinion derive from speculation, not from productive activities, they do not increase the pie, they just redistribute it, usually in a regressive manner. This is not capitalism, this is speculation.
- Paolo, London, UK
Please name and shame these greedy low-life scum-sucking parasites.
- Tango Mike, Kensington, London
Pay up, same as you did for the 10 totally useless wasters you let go in Frankfurt with almost 60M in bonuses that they 100% did not deserve
- Cockney Deutscher, Frankfurt
greedy and selfish individuals - must be part of the 'me' generation.
- William Bailey, wgtn
This is not going to go down well with te public. Frezze the bonus payments for ten years. No interest.
- Dhan Raj, Basildon
What people never realise is that these bankers, yes, whilst handsomely paid in bonuses actually receive very very small basic salaries (bearing in mind their experience, hours worked, length of service etc). Yes, change the system going forward if you will (to smaller overall packages). But to pull the rug on contractually agreed amounts, restrospetively, when they actually made large amounts for the banks - that's not on.
- Delilah, London
I imagine future contracts of employment for people like this are going to be worded much tighter to prevent this sort of thing.
The way women behave with their demands for "compensation" in the future is doing their sex no good when it comes to selection.
- Michael, london, UK
It sounds like this bonus was guaranteed by Allianz who aren't even a bank and never needed government support - so it should be paid.
- Bob Spires, Coventy
Never mind suing for bonuses, bankers should count themselves lucky that the angry mob of the redundant or those who have lost their businesses have not started to gather yet to hunt out those bankers who have collectively destroyed our economy, businesses and jobs.
- Gabriel, Essex
As i type this i am sobbing and like most of the population want to have a collection or charity event to raise money as way of compensation for your 'loss'...we share your pain..After all,your job is far more important than a nurse or emergency services,hopefully this will be sorted out and your healthy bonuses will be left alone..
- Jonnie Of Brixton, brixton,london,england
Another lawyers gravey train. I do hope they have Legal Aid for this one. I think we should all support the downtrodden and abused workers. Hell , their employers made a fortune on their deals.
NB Take them to court in the UK . Softest and most corrupt in europe.
- Terry, Hennebont France
If it does NOT come from the public purse, it is of no matter to anyone but the payer and the payee.
I was used to receiving 90% of my annual salary, when I was at Security Pacific, in the states.
None of this money came directly from the public tax payer as the contracts were signed knowing by both sides that if the deal went ahead, after sometimes months of secrecy and wrangling behind the scenes, then that was the agreed cost of that deal.
That's commerce, it's not charity,but it is life as we knew it Jim.
The UK is run by those who have a lot, those who wish to have as much or more, on behalf of the greater majority who shall never have...it's a shame , but it won't change just because you bring in a new administration, esp. as they represent the first tranch...good luck?...you're going to need more than just that...a national backbone will be a start.your FSA is run by people with as we say in Spain, chicken livers.
- Elcorbo Esteban, Espana
What? You expected them to "...go quietly into the night"? These people didn't get where they are by being shrinking violets!
- Rogan, Irving
When the bankers are not at the trough (which is hardly ever) the lawyers get their snouts in.
- Michael John Murphy, Brightlingsea
Paul, "Capitalism works by companies working with-in the rules (which are unfair and unjust". I think their only mistake was trusting the word of their employer. Since when has breaking an agreement been fair or indeed just?"There is no social cognisance....", well that IS funny. It looks like their only mistake was trusting the word of their employer. Capitalism will win through, as it always does, so you will have to deal with your bitter demons and get real. Good luck folks, I hope you win.
- C Moorehead, London, UK
Adrian, wake up. The world has changed as we all know and are paying so heavily for. Bankers getting fat bonuses for short term profit making is a key contributing factor to why the global economy has taken a pounding recently.
I'm more than happy for these guys to earn as much as they are worth, so long as it is based on them creating long-term value for their businesses. Rewarding people to take short term risks isn't something we should return to in banking unless the british public want to own more of them.
- James, London, Maida Vale
“This case is about English law and an English court will decide on that basis and will not be influenced by political issues,” said Mr Zietman.
Yeah right!
- Geraldine, London
- Adrian, London
Good Luck?
Why would you wish good luck to any banker; they don't give a dam about anyone else but themselves. I can never understand this British good luck to them mentality. Capitalism works by companies working with-in the rules (which are unfair and unjust), then pushing each rule to its limits… there is no social cognisance or ethical process involved. It’s all about money and making it by what ever means possible.
- Paul, London
such a shame to drag the good name of Commerz through the mud!...... for a paltry 30 mio.......if you said they were going to pay, them pay you clowns!... i guess they will have to spend 100 mio of the good german tax payers money, trying to ressurect the brand name........the only winners yet again... the Lawyers!... pass me the bucket!
- Dingle, london uk
John, foreign exchange is a highly liquid product unlike 'toxic assets', profits generated is generally profits kept as opposed to credit markets which is mainly marked to market and subject to illiquidity.
- T.C, london
Can someone explain what a 'Provisional Promise' is?
- T.C, London
Oh dear; "...pressure from the Financial Services Authority" Is this the same FSA that oversaw the Northern-Rock debacle? Could this be another fine mess they've got us into Stanley? Will it be shown that irresistible pressure was exerted by the FSA upon Dresdner? There seems to be the whiff of yet another large bill for the taxpayer to pick up.
It will be interesting to see the nature and extent of any sustainable profits these individuals achieved.
- John Cochrane, Leatherrhead, UK
And why not - if they've made profit for the bank they should be paid. Good luck!
- Adrian, London
I expect they're still very wealthy, but are sore they won't be able to have an underground cinema, swimming pool and gym built under their houses. My heart bleeds. Really.
- Neil, London, London UK
Because they're worth it!
- Bloke, Lambeth
This will be an interesting test to all the bluster and bull from politicians this past 12 months - the sanctity of contract!
- Dc, London
