After suffering considerable losses during the recession, the German government granted Commerzbank an €18 billion bail-out. Only part of the money has been paid back and the bank remains 25 percent state owned.
Despite the bank not clearing its debt, and dipping in and out of financial hot water, chief executive Martin Blessing’s salary was uncapped and went from €500,000 to around €1.3 million in a year, the Süddeutsche Zeitung newspaper said on Tuesday.
The paper revealed that he was called in front of a government financial market panel last month to explain the decision, and according to one insider, “to justify his massive pay-rise.”
His argument was that the increase was not a pay-rise, per say, but that previous restrictions on his original wage had been lifted – an explanation that the Süddeutsche Zeitung said left few on the panel convinced.
Commerzbank struggled through 2011 and 2012, with the government even mulling a second multi-billion euro bailout in December last year. It remains to be seen whether investors will receive dividends from the bank – meaning that it may not have turned a profit this year.
Bank officials told a meeting in London last week it was still not certain whether interest could be paid on the tax payers’ shares.
Blessing is working on a new strategy for the bank, while industry insiders are expecting around 1,000 jobs to be cut.