Deutsche Bank AG is considering deep cuts to bonuses for this year as Chief Executive Officer Christian Sewing seeks to eliminate billions of euros of costs in a radical restructuring.

Germany’s largest lender may reduce discretionary compensation by as much as 20%, outpacing a 5% decline in the bank’s workforce this year, according to people with knowledge of the matter. Sewing and the board still haven’t made a final decision since the fourth quarter isn’t yet over, the people said.

Representatives for Deutsche Bank declined to comment.

Sewing is seeking to balance the need to retain top talent at the struggling investment bank with his pledge to deliver about $6 billion in cost cuts over the next few years. That challenge has become more acute now that he’s put the securities unit back into the center of Deutsche Bank’s growth plans.

Revenue at the division, led by Mark Fedorcik and Ram Nayak, was down 11% in the first nine months of the year while pretax profit plummeted by 47%. However, Sewing said Tuesday that “momentum” in the unit has been encouraging of late, a view echoed by other investment banks that have pointed to improving trading conditions in the fourth quarter.

Deutsche Bank rose 0.3% at 3:33 p.m. in Frankfurt trading, paring losses this year to 2.4%.

Sewing is trying to convince shareholders his strategy is on track, after announcing in July a plan to slash a fifth of the workforce and exit equities trading. He’s sold off unwanted assets, cut costs and won a reprieve from the bank’s main regulator, which lowered a key capital requirement. But the outlook for a prolonged period of negative interest rates is hurting revenue from lending, forcing Sewing to count on riskier investment banking businesses.

Raised Outlook
The lender earlier this week raised its outlook for the investment bank, making its turnaround effectively more dependent on the unit that bore the brunt of cutbacks in recent years. At the same time, it formally lowered its mid-term revenue target to about 24.5 billion euros ($27.1 billion) from 25 billion euros, saying the retail and the corporate clients divisions at the center of Sewing’s turnaround will be particularly hard hit by negative rates.

Nayak, who oversees fixed income trading, said the bank has concluded the majority of cuts to revenue-generating staff at the investment bank. He said he was optimistic that his unit, which was responsible for a decline in investment bank revenue this year, has since halted that trend.

Deutsche Bank spent 1.9 billion euros on last year’s bonuses. The bank has said the size of the pool this year will reflect the shrinking workforce. In addition to shutting equities, Sewing is transferring as many as 1,300 employees from the part catering to hedge funds to BNP Paribas SA.

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