Deutsche Bank will cut bonuses for staff that inappropriately used messaging services for business communications as the repercussions from a sweeping US probe ripple across the industry.
Employees whose usage of unauthorised devices or messaging apps was found to be in particularly severe breach of policies will see a substantial reduction in variable pay, people familiar with the matter said.
The cuts affect pay still to be awarded for last year, the people said, asking not to be identified discussing private information.
Deutsche Bank is among several global lenders that have paid fines of more than $2bn (€1.5bn) to the Securities and Exchange Commission and the Commodity Futures Trading Commission to settle an industry-wide investigation into whether bank staff made use of unauthorised communication channels.
The German lender’s top executives took a pay cut last year over the issue, and the bank has rolled out new software as it seeks to address the issue.
“We have a consequence management framework in place,” Deutsche Bank said in a statement.
“Depending on the quantity and quality of violations this will also impact performance evaluation, individual compensation and promotion and can lead to disciplinary measures.”
Barclays earlier said that it docked £500m from its 2022 bonus pool, in part to punish staffers involved in messaging by WhatsApp and other services.
The British bank was also among the institutions that settled with US regulators last year.
The US probe has also set off other changes across the industry.
A roster of firms including Citigroup, Goldman Sachs and Morgan Stanley have each promised to hire a compliance consultant to review how they monitor and archive any work-related communications, including on employees’ mobile phones or other personal devices.
The SEC probe is ongoing and the regulator has expanded it to include hedge funds and asset managers, Bloomberg has reported.
It has also included Societe Generale’s US unit, indicating that smaller broker dealers may also be targets now.
Some Deutsche Bank investment bankers are already on track for a smaller bonus pool this year.
Variable compensation in the division advising companies on deals and issuing debt and equity may plunge by 40pc, Bloomberg has reported.
The trading unit, which performed much more strongly, could see a bump in bonuses of about 10pc.
Industry rules have long required banks to archive business communications to ensure regulators can check them if necessary at a later stage.
But the rapid spread of private-messaging tools outside of banks’ controls has undermined that effort.