Dresdner Kleinwort - Closure and Legacy

Closure and Legacy

In December 2008 Commerzbank, who was in the process of acquiring Dresdner Bank, decided to close its Mergers & Acquisitions Unit. Then in March 2009 it became clear that the office in Japan would close. It also became clear that the capital markets and equities units would close and that advisory work would only be undertaken for Commerzbank's German clients.

In February 2009 the Commerzbank management announced that no bonuses would be paid across the Commerzbank group including Dresdner Kleinwort. This was clarified to mean that Front Office staff would receive 10% of the bonus promised December 2008 and support functions would receive their full bonus.

This, together with issues regarding severance payments and guaranteed bonus payments, has led to a number of lawsuits. In general, Commerzbank has claimed it is not morally obliged to pay bonus payments for failure, while those suing have claimed that they are contractually obliged regardless of the overall finances and/or that their specific parts of Dresdner Kleinwort made money.

• Jens-Peter Neumann, former head of Capital Markets sued in Germany in April 2009 for €1.5 million in severance pay.

• Former senior managers Martin Newson, Eduardo Listorti and Michael Adams sued but settled out of court. Other executives (Areski Iberrakene, Efstratios Hatzistefanis, Kaveh Taleghani and Stefan Guetter) won their bonus suits against the bank in August 2009.

• Additional cases were brought by Dresdner Kleinwort executive committee members John McIntyre, Bertrand Pinel and Alberto Piedra in August 2009 seeking €11 million.

• In September 2009, 72 former and current Dresdner Kleinwort front office employees sued for £30 million in disputed bonus payments.

In September 2009 Commerzbank decided to abandon use of the Dresdner Kleinwort name, though the legal actions resulting from the bonus issue is likely to keep it in the public eye for some time.