Deutsche Bank scrapped the bonuses of its top executives for a second straight year and slashed them for other senior employees, as Germany’s largest lender tries to shore up capital that’s been eroded by low interest rates and legal expenses.

The measures, announced in a memo to employees on Wednesday that was signed by the members of the management board, will affect about a quarter of employees, including vice presidents, directors and managing directors. A “limited number” of employees in crucial positions will receive a special long-term incentive, partly in stock, that will be deferred for as long as six years, according to the memo.

Deutsche Bank was rocked last year by concern about its capital adequacy, a 23 per cent slump in its share price and rising litigation bills from Europe to the US, chief executive John Cryan, 56, has eliminated jobs, suspended dividends and sold risky assets to shore up profitability and capital buffers.

The bank on Tuesday reached a $7.2bn (£5.8bn) final settlement with the US Justice Department over its sales of mortgage securities before the financial crisis. It’s still seeking to end an investigation related to its Russian unit.

“Now that we have a clearer idea of the financial impact of the settlement with the US Department of Justice and our performance for the year, we feel that tough measures are unavoidable,” the bank said in the memo. “This is especially true at a time when thousands of jobs are being cut and our shareholders are not receiving an annual dividend.”

The widespread bonus cuts, unprecedented in the bank’s recent history, highlight the severity of its troubles, and come as fixed-income traders around the world are about to see their annual pay grow for the first time since 2012 amid a surge in bond trading, according to a November report from recruitment firm Options Group.

Last year, the lender reduced bonuses by 17 per cent, saying “a more significant reduction would have jeopardised the implementation” of its strategy and “compromised the bank’s ability to attract and retain talent.”

“Employees interested in the long-term development of Deutsche Bank will understand the bonus cut and stay,” said Alexander von Preen, a consultant with executive search company Kienbaum. “But some of those taking a more short-term view on their career may be tempted to look around for new opportunities.”

Top executives at Wall Street banks including Goldman Sachs and UBS agreed to forgo their bonuses immediately after the financial crisis. Deutsche Bank’s then-chief executive Josef Ackermann also waived his bonus at the time, along with other members of the bank’s management and supervisory boards.

Business news: In pictures Show all 13 1 /13 Business news: In pictures Business news: In pictures Flybe collapses Airline Flybe has collapsed. All future flights on the Exeter-based airline have been cancelled – leaving more than 2,300 staff facing an uncertain future, and wrecking the travel plans of hundreds of thousands of passengers. The chief executive, Mark Anderson, said: “Europe’s largest independent regional airline has been unable to overcome significant funding challenges to its business. AFP via Getty Business news: In pictures Future product placement will be 'tailored to individual viewers' Marketing executives say that product placement in films and televison shows on streaming services such as Netflix may be tailored to individuals in future. For instance, if data shows that a viewer is a fan of pepsi, a billboard in the background of a shot would host an advert for pepsi, while for a viewer known to have different tastes it could be for Coca-Cola Paramount Business news: In pictures Corbyn wishes Amazon a happy birthday In a card sent to Amazon CEO Jeff Bezos on the company's 25th birthday, Labour leader Jeremy Corbyn writes: "You owe the British people millions in taxes that pay for the public services that we all rely on. Please pay your fair share" Business news: In pictures No deal, no tariffs The government has announced that it would slash almost all tariffs in the event of a no-deal Brexit. Notable exceptions include cars and meat, which will see tariffs in place to protect British farmers Getty Business news: In pictures Fingerprint payment NatWest is trialling a new bank card that will allow people to touch their hand to the card when paying rather than typing in a PIN number. The card will work by recognising the user's fingerprint NatWest/PA Wire Business news: In pictures Mahabis bust High-end slipper retailer Mahabis has gone into administration. 2 Jan 2019 Mahabis Business news: In pictures Costa Cola Coca-Cola has paid £3.9bn for Costa Coffee. A cafe chain is a new venture for the global soft drinks giant PA Business news: In pictures RIP Payday Loans A funeral procession for payday loans was held in London on September 2. The future of pay day lenders is in doubt after Wonga, Britain's biggest, went into administration on August 30 PA Business news: In pictures Musk irks investors and directors Elon Musk has concluded that Tesla will remain public. Investors and company directors were angry at Musk for tweeting unexpectedly that he was considering taking Tesla private and share prices had taken a tumble in the following weeks Getty Business news: In pictures Jaguar warning Iconic British car maker Jaguar Land Rover warned on July 5, 2018 that a "bad" Brexit deal could jeopardise planned investment of more than $100 billion, upping corporate pressure as the government heads into crucial talks AFP/Getty Business news: In pictures Spotif-IPO Spotify traded publically for the first time on the New York Stock Exchange on Tuesday. However, the company isn't issuing shares, but rather, shares held by Spotify's private investors will be sold AFP/Getty Business news: In pictures French blue passports The deadline to award a contract to make blue British passports after Brexit has been extended by two weeks following a request by bidder De La Rue. The move comes after anger at the announcement British passports would be produced by Franco-Dutch firm Gemalto when De La Rue’s contract ends in July. The British firm said Gemalto was chosen only because it undercut the competition, but the UK company also admitted that it was not the cheapest choice in the tendering process. Business news: In pictures Beast from the east economic impact The Beast from the East wiped £4m off of Flybe’s revenues due to flight cancellations, airport closures and delays, according to the budget airline’s estimates. Flybe said it cancelled 994 flights in the three months to 31 March, compared to 372 in the same period last year.

“Other companies have taken similar steps in the past and have come back stronger than before,” Frankfurt-based Deutsche Bank said in the memo. “We are convinced that we will, too.”

The bank said it plans to return to its regular compensation program for 2017.

For 2016, senior employees will still receive a group variable compensation component, according to the memo. About 75 per cent of employees will not be affected by the bonus decision, or only to a small extent, the bank said. Most junior Deutsche Bank employees have already been shifted into fixed salaries, so the decision to scrap bonuses won’t affect them, a person familiar with the matter has said.

Last year, Deutsche Bank awarded €2.4bn (£2.08bn) of bonuses for 2015, €1.45bn of which was for the combined investment banking and trading unit, according to the bank’s annual report. Of the €2.4bn, 49 per cent was deferred stock and cash while the remainder was paid out immediately.