Deutsche Bank’s management board agreed to take a pay cut after criticism from regulators of widespread use of private communication channels among staff via applications such as WhatsApp, according to people familiar with the matter.
Top executives are set to see a 75,000 euro ($79,000) cut to bonuses given for last year’s performance that start getting delivered from next year, one of the people said, asking not to be identified discussing a private matter. The lender is among several financial firms under investigation by U.S. authorities over the use of private messaging that can’t be archived. It recently introduced a new app that allows the retrieval of messages on company phones.
A spokesman for Deutsche Bank declined to comment. The regulatory scrutiny had added to compliance headaches that have built up for Deutsche Bank Chief Executive Officer Christian Sewing, who has spent billions of dollars trying to fix the bank’s controls and improve relations with supervisors since assuming his role four years ago. While the CEO has drawn a line under several big litigation risks, new issues have continued to arise.
Sewing himself has used WhatsApp in the past to communicate on issues related to the lender. At one point, he swapped messages with a German businessman, Daniel Wruck, whose role in business deals involving Deutsche Bank and its investment arm DWS has been probed by German investigators, Bloomberg has reported.
The German lender has also begun rolling out a new technical solution that improves oversight of communications through private channels by recording and archiving conversations, one person previously said. The pilot program kicked off in late April and the software has been installed on the devices of 1,750 client-facing staff in the U.S., the person said at the time.
Firms including Goldman Sachs Group and HSBC Holdings have been p
In December, the Securities and Exchange Commission and Commodity Futures Trading Commission imposed $200 million in fines on JPMorgan Chase, saying that even managing directors and other senior supervisors at the bank had skirted regulatory scrutiny by using services such as WhatsApp or personal email addresses for work-related communication. In February, Citigroup said in a filing that it was cooperating with the SEC as the regulator investigated “communications sent over unapproved electronic messaging channels.”
JPMorgan asset- and wealth-management head Mary Erdoes had her 2021 incentive compensation cut “related to internal, SEC and CFTC investigations into the firm’s compliance with certain record preservation requirements,” the firm disclosed in a
— With assistance from Hannah Levitt.
