By Kirstin Ridley
LONDON, March 5 Commerzbank said on
Tuesday an English judge made "surprising" errors when ordering
Germany's second largest lender to pay 104 London-based bankers
52 million euros ($68 million) in bonuses.
At the start of a three day Court of Appeal hearing, the
bank said that it had made no binding contractual agreement to
pay the bankers their 2008 bonuses as the credit crisis raged in
2008 and the lender's losses spiralled.
According to court documents, the bank said High Court Judge
Robert Owen made a series of mistakes in his judgment last May,
including that staff notification by a single live 'broadcast'
on the bank's intranet was potentially binding.
Commerzbank called this interpretation of a section in its
staff handbook, "both surprising and erroneous".
The three-year legal battle shines a light on a bygone era
before political and public scorn became focused on fat banker
bonuses, blamed for encouraging a culture of risk that helped
trigger the financial crisis and economic recession.
Commerzbank says it acted responsibly and reasonably when it
slashed discretionary bonuses by 90 percent as the credit crunch
put the future of its now integrated investment banking arm,
Dresdner Kleinwort, at risk.
The bankers, whose claims range from around 15,000 euros to
2.6 million euros, contend that Commerzbank reneged on
contractual promises and that heavy losses at Dresdner Kleinwort
had been well known when their bosses made and repeated bonus
The dispute hinges on whether these promises were binding
and enforceable, whether Commerzbank was entitled to make 2008
awards dependent on bank performance after buying Dresdner in
2009 and whether it could subsequently slash some bonuses
Commerzbank was forced to take its case to the Court of
Appeal directly after Judge Owen refused to refer the appeal
last May, saying the bank had acted in a "highly reprehensible"
He further enraged the bank by suggesting it had sacrificed
the contractual rights of its employees "on the altar of public
perception" to save it embarassment after being forced to seek a
government bailout following the Dresdner deal.
The Court of Appeal is expected to deliver its judgment in
around eight weeks.
Commerzbank's chief executive Martin Blessing said last
month he would waive a 700,000-euro bonus for 2012 as the
slowing economy, stiff competition, a raft of new regulations
and rationalisation costs eat into earnings.