Commerzbank announce clawback

Commerzbank announces clawback

In the wake of the economic crisis, banks are (whether they like it or not) having to reign in short-term risk-taking in an effort to restore consumer confidence and adhere to new regulations. As such Germany's Commerzbank has announced it will now introduce a clawback option to its bonus system next year.

The move will see the bank, which is currently 25 percent owned by the German government after an 18 billion euro bailout, attempt to quash concerns in Germany over the eye-popping payouts made to bankers who mainly worked at the bank's loss-making investment bank.

Other financial services firms, including Unicredit, Morgan Stanley and UBS have already responded to political pressure by overhauling their bonus systems to include clawback options, and Deutsche Bank has now said that it, too, will look at introducing similar measures.

New regulations

The problem, however, is that despite regulators and world leaders agreeing that short-term risk-taking as one of the major contributors to the financial crisis, policymakers have failed to come to an agreement on how to either regulate or cap bankers' bonuses - despite severe calls for such caps at September's G20 Summit in Pittsburgh, America.

For Commerzbank, their new system - announced yesterday - will form part of a wider plan to clamp down on payouts that reward only short-term performance. The call for the new plan comes from the firm's chief executive Martin Blessing, who has already said he won't get a bonus this year. The plan will also see Commerzbank stagger bonus payouts and drop them altogether if the bank’s performance has suffered.

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