Daniel Schäfer
Deutsche Bank
is losing some of its strongest financial performers amid a clampdown
on bad behavior by traders, as the lender faces ongoing probes by global
regulators into allegations of attempts to rig markets.
The bank has introduced a policy of no longer rewarding the best earners on the trading floor with a promotion or the highest bonuses if they are "disruptive" or are not seen as team players, in a move that is adding to the outflow of senior talent away from traditional banking into less regulated areas and boutique firms.
"We definitely are seeing leakage," Colin Fan, the lender's co-head of investment banking told the Financial Times.
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"Some people are purely financially driven and they're going to less regulated spaces, maybe it's tech, maybe it's hedge funds; we
wish them well. These are people that probably won't fit into the new banking environment anyway."
Fan shot to fame earlier this year after an internal video in which he scolds Deutsche traders went viral with its message that being "boastful, indiscreet or vulgar is not OK.".
Other banks are in the middle of introducing similar measures. Barclays, for example, is implementing a company-wide bonus policy this year which takes into account individual adherence to the UK bank's values and behavioral guidelines. The move picks up recommendations from an independent review last year, which blamed Barclays' bonus culture as one of the factors that led to the Libor rate manipulation scandal.
Bankers across the industry say there has been a shift in the way investment banks promote people in the wake of trading scandals that have hurt the industry's reputation, with employees needing a much wider variety of credentials to get a coveted promotion to managing director.
These include not only a stellar performance but also deeper knowledge about administrative and compliance procedures as well as being what banks like to call a good corporate citizen.
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The bank has introduced a policy of no longer rewarding the best earners on the trading floor with a promotion or the highest bonuses if they are "disruptive" or are not seen as team players, in a move that is adding to the outflow of senior talent away from traditional banking into less regulated areas and boutique firms.
"We definitely are seeing leakage," Colin Fan, the lender's co-head of investment banking told the Financial Times.
Read MoreEuro zone seeks to soften German stance on stimulus
"Some people are purely financially driven and they're going to less regulated spaces, maybe it's tech, maybe it's hedge funds; we
wish them well. These are people that probably won't fit into the new banking environment anyway."
Fan shot to fame earlier this year after an internal video in which he scolds Deutsche traders went viral with its message that being "boastful, indiscreet or vulgar is not OK.".
Other banks are in the middle of introducing similar measures. Barclays, for example, is implementing a company-wide bonus policy this year which takes into account individual adherence to the UK bank's values and behavioral guidelines. The move picks up recommendations from an independent review last year, which blamed Barclays' bonus culture as one of the factors that led to the Libor rate manipulation scandal.
Bankers across the industry say there has been a shift in the way investment banks promote people in the wake of trading scandals that have hurt the industry's reputation, with employees needing a much wider variety of credentials to get a coveted promotion to managing director.
These include not only a stellar performance but also deeper knowledge about administrative and compliance procedures as well as being what banks like to call a good corporate citizen.
Read MoreTwitter users in France can now tweet money
Patti Domm | CNBC
Deutsche Bank signage in Vienna, Austria.
"Senior bankers need many more skills than just being a
good dealmaker or trader. The hurdles to get promoted have become much
higher," an executive at a large European bank said.
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After a series of scandals, costly fines and a raft of stricter rules since the financial crisis, senior bankers are now operating in a much tighter corset and have to be able to show that they know the rules and even non-binding ethical codes.
"I think the entire industry is being very deliberate on the changes [to trader culture] that are required," said Mr Fan. "We all firmly believe you cannot seriously be operating under the old culture."
Fan's words come only days after it emerged that billionaire Steven Cohen, at his hedge fund Point72 Asset Management, will introduce a 4 per cent extra bonus for staff who adhere to the company's compliance and broader ethical standards. The move to foster a better culture came after his previous hedge fund SAC shut down in the wake of insider trading charges.
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Recruitment experts are sceptical about the real weight of ethical and cultural factors, given the relentless pressure to produce profits in much tougher markets. "Across the street banks are trying to correct the bad habits of their senior producers and trying to encourage them to be gentler and kinder," a senior headhunter said.
"But realistically I think they obviously are still focused on how much revenues they're bringing in. As long as they're not breaking any rules I think they will still rule the nest," he added.
After a series of scandals, costly fines and a raft of stricter rules since the financial crisis, senior bankers are now operating in a much tighter corset and have to be able to show that they know the rules and even non-binding ethical codes.
"I think the entire industry is being very deliberate on the changes [to trader culture] that are required," said Mr Fan. "We all firmly believe you cannot seriously be operating under the old culture."
Fan's words come only days after it emerged that billionaire Steven Cohen, at his hedge fund Point72 Asset Management, will introduce a 4 per cent extra bonus for staff who adhere to the company's compliance and broader ethical standards. The move to foster a better culture came after his previous hedge fund SAC shut down in the wake of insider trading charges.
Read MoreGoldman slashes Hong Kong growth outlook
Recruitment experts are sceptical about the real weight of ethical and cultural factors, given the relentless pressure to produce profits in much tougher markets. "Across the street banks are trying to correct the bad habits of their senior producers and trying to encourage them to be gentler and kinder," a senior headhunter said.
"But realistically I think they obviously are still focused on how much revenues they're bringing in. As long as they're not breaking any rules I think they will still rule the nest," he added.
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