Deutsche investment bank changes aren’t sinister
Deutsche Bank is losing half of one of the few successful double acts in investment banking. Michael Cohrs, who has co-run the German group’s investment bank for six years, is to set to retire and hand sole charge of the unit to Anshu Jain. Cohrs’ departure and the concentration of power in a markets whizz may unsettle investors. But while the transition has its challenges, this looks like a natural evolution.
Cohrs’ exit comes against a backdrop of high-profile exits from Deutsche, with several senior bankers — including a co-head of the U.S. natural resources team — leaving this year. But the timing looks pre-planned. It coincides with the original leaving date scheduled for group chief executive Josef Ackermann, who deferred his own retirement to 2013.
The advisory business for which Cohrs has had direct responsibility since 2001 has come far under his tenure, jumping from nowhere to top-five status in U.S. M&A. It’s easy to see why the 53-year-old American may not want to hang around for the next boom.
Still, Cohrs’ business has always been overshadowed by Jain’s markets machine. Judged on his contribution to revenues, Jain has certainly earned the right to take over. And while the co-head structure has worked well, it would be risky to wedge in a new leader alongside Jain at this stage.
Jain is a candidate to replace Ackermann. He now has some big challenges to tackle solo. He must protect the position in the business that Cohrs has built up, and should consider appointing a new advisory champion to secure that legacy.
Above all, Jain needs to defend investment banking within Deutsche amid pressure to allocate capital to less risky businesses. Moody’s, the rating agency, recently criticised Deutsche’s dependence on capital markets, questioning its risk management capabilities. It is hard to think of a stronger advocate for capital markets than Jain. He will have to resolve tensions both internally and with regulators in the coming years. If he handles that well, his candidacy for the top job at the bank will be strengthened.