A Deutsche Bank sign is seen on the outside of its building in London.
(The Center Square) – North Carolina has ended a grant incentive agreement with Germany-based Deutsche Bank after the financial institution failed to uphold its end of the deal.
In 2015, the bank promised to hire 250 local employees for its Cary facility in exchange for $3.4 million in grants. The company has failed to reach the employment goal and now plans to lay off employees.
The state’s Economic Incentive Committee voted Tuesday in favor of ending the agreement. Representatives from Deutsche Bank asked the North Carolina Department of Commerce officials to end the agreement in a June letter.
The News & Observer reported that the company blamed the layoffs on its decline in the European market.
“As a result of challenges faced in the European financial market and the fiscal pressure faced by the Bank during 2017 and 2018, DB Global Technology Inc. has curbed prior plans for expansion of our technology footprint in Cary, North Carolina,” David Miller, of DB Global Technology, wrote in the letter to Commerce officials. “This resulted in an overall reduction of headcount at the project facility.”
North Carolina uses investment grants to attract large companies and jobs to the state. Deutsche Bank took advantage of the state’s Job Development Investment Grant, which was supposed to offset the cost of expanding its Cary location. The expansion was supposed to be completed by 2017.
The amount of the grants are based on the projected personal income tax withholdings from the new jobs. The state’s agreement with Deutsche Bank would have awarded the company 12 annual reimbursements equal to 35 percent of the withholdings.
The average annual payroll for the Cary technology engineers, software developers and analysts was estimated to be $21.4 million.
The Department of Commerce did not immediately respond to a request for comment, but according to the agency’s website, the job development grant agreements “hold companies to strict performance targets.”
A review of the One North Carolina Fund and the Job Development Investment Grant programs by WRAL News in December found both programs have met only half of the job goals announced between 2009 and 2016.
Notwithstanding, the state has paid out less based on the conditions of the grants.