* Judge says bank acted in "highly reprehensible" manner
* To order Commerzbank to pay 5.3 mln stg banker costs upfront
* Says has to pay interest on damages of at least 5 pct over base rate
* Commerzbank says might go to Court of Appeal
By Kirstin Ridley
LONDON, May 30 (Reuters) - Commerzbank, Germany's second-largest lender, has been denied the right to appeal against a judgement that it must stump up 52 million euros ($65 million) in unpaid bonuses to 104 London-based bankers, and been landed with 18 million in extra costs.
Rejecting the appeal request, High Court Judge Robert Owen said on Wednesday the bank acted in a "highly reprehensible" manner and "was unreasonable to the high degree that warrants an order for indemnity costs".
Commerzbank, which slashed 2008 discretionary bonuses by 90 percent after its Dresdner Kleinwort investment banking arm ran up vast losses during the financial crisis, said it was considering whether to petition the Court of Appeal directly.
"The cost of petitioning the Court of Appeal will not be material, and there is nothing to lose in doing it," said Stefan Martin of law firm Allen & Overy. "We have not seen the end of this case, but I cannot see it getting any better for Commerzbank."
Lawyers for the bankers said it was time to draw a line in the sand.
"Having been refused an appeal, and having had the conduct of Commerzbank condemned by the judge in such strong terms, we hope that (Chief Executive) Martin Blessing will have Commerzbank finally comply with its obligations and allow everyone to move on," said Daniel Naftalin, a partner at law firm Mishcon de Reya, who represented some of the bankers.
Even if Commerzbank remains unsuccessful, political pressure to curb banker pay remains high. Earlier this month European Union lawmakers proposed capping bonuses at the same level as a banker's fixed salary.
"The industry has changed to such an extent that we will not see a return to those kind of Commerzbank contracts in the future," a banking source who declined to be named, said.
Lawmakers have already forced banks to introduce clawback clauses that allow banks to withhold pay if banker performance turns out not to have been to the benefit of the bank.
A slew of major international banks have already faced shareholder revolts over executive pay.
The impact of the euro zone crisis on business has already pushed down bonus pots which in London will be almost halved this year at nearly 10 billion pounds, the lowest in a decade.
If the bank decides against any further appeal attempt, it will be ordered to make a prompt payment of 5.3 million pounds ($8.3 million) to the bankers to cover half of their expected legal bill of around 10.6 million.
It will also pay most of the bankers, whose claims range from around 15,000 euros to 2.6 million euros, interest on their damages at a rate of 5 percent above base rates. Twenty one bankers, whose offer to settle was rejected in 2010, will get an interest rate of 10 percent from March 2010.
"I am satisfied that the appropriate rate at which to compensate the claimants for being kept out of their money is the cost of unsecured borrowing by individuals," Owen said.
The interest charges and costs could bump up the total cost of the claim to roughly 70 million euros for Commerzbank.
The dispute hinged in part on whether the bank's promises of bonuses constituted a contractual agreement and whether it had been within its rights to introduce a "material adverse change" (MAC) clause in bonus letters after the Dresdner takeover in 2009.
Judge Owen enraged Commerzbank by suggesting it had sacrificed the contractual rights of its employees "on the altar of public perception" after being forced to seek a government bailout following the Dresdner deal.
"The bank maintains that Dresdner Bank introduced the MAC clause due to its legitimate concerns for losses at its investment banking unit," a Commerzbank spokeswoman said.
During a four-week trial that began in January, Commerzbank argued its now integrated Dresdner subsidiary was both justified and obliged to slash bonuses as losses spiralled to 6.5 billion euros and threatened the survival of the business.
But the bank's attempt to have the case dismissed before it came to trial was thrown out by the Court of Appeal last year, and earlier this month Judge Owen ruled it had breached its legal duties by failing to honour the payout pledges.
Lawyers for the bankers said the heavy Dresdner losses had been well known and, in fact, had been the reason the bank had set up a "staff retention plan" by promising loyal bankers a share of a minimum 400 million euro guaranteed bonus pool.