More than 70 City traders are suing their former employer for millions of pounds after their bonuses were withheld.
The 72 traders, who worked for German bank Dresdner Kleinwort in the City of London, claim their bonuses, which totalled about £30m, were ring-fenced before Commerzbank bought Dresdner for €6bn (£5.2bn) in September 2008.
In a law suit filed in the High Court, the litigants claim that Dresdner’s chief executive Stefan Jentsch approved a €400m (£349m) bonus pool for the firm’s traders.
But, by the time the bonuses were due to be paid, Dresdner had been acquired by Commerzbank, which cut the 72 traders’ bonuses by 90%. It said it had to slash the bonuses after its profits slumped last November and December.
Dresdner said it would defend itself “vigorously” in the courts.
According to reports, individual claims include one by former options trader Jonathan Powell for £1.46m, and another from foreign exchange trader Ian Robertson for £1,313,904.
Commenting, Michael McCartney, associate at law firm Dechert, said: “This case is unusual since it appears that the bank had already allocated a bonus pool and sent letters to the claimants notifying them of the bonuses they could expect to receive. Subsequently, the bank exercised its discretion to pay considerably lower sums relying on a provision allowing it to do so in the event of additional material deviations in the bank’s profitability.
“The court will therefore need to decide whether the original bonus allocation in December 2008 was sufficiently certain as to amount to a binding contractual agreement. If so, the only remaining issues will be whether or not the bank retained a discretionary power to reduce this bonus and, assuming it did, whether the bank exercised its discretion reasonably and in accordance with the terms of the contract.”