Investment bankers complete Deutsche Bank takeover
By Peter Thal Larsen
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
Investment bankers have finally completed their takeover of Deutsche Bank. The German group’s latest reshuffle has vaulted executives from its corporate and investment banking division into senior positions. That’s partly new co-CEO Anshu Jain picking his own team. But it’s also confirmation that, despite post-crisis reforms, trading and risk management nous are still essential.
The takeover at Deutsche has been a long time coming: it started in 2002, when Josef Ackermann was given the top job. His mission was to muscle Deutsche into the global, English-speaking investment banking bulge bracket. He succeeded. The investment bank generated more than half of Deutsche’s income in 2011, despite sluggish markets and the euro zone crisis.
In the process, Deutsche’s relationship to Deutschland became increasingly strained, even though the bank’s senior management was still dominated by German nationals – or at the very least German speakers. The decision to replace the Swiss Ackermann with two CEOs – Juergen Fitschen, a German, and the Indian-born Jain – reflects the tension.
There’s no question which side is now in charge. Only one of the three new arrivals on the management board – chief risk officer William Broeksmit, chief operating officer Henry Ritchotte, and European CEO Stephan Leithner – is a native German-speaker, and all of them previously worked for Jain. Deutsche is also installing Michele Faissola, currently head of rates and commodities in the investment bank, as head of a revamped wealth and asset management unit.
The promotions are partly corporate politics: new CEOs like to surround themselves with loyal lieutenants. But the changes also reflect the skills required to run large financial institutions. Even though Deutsche, like others, has been seeking to expand its retail banking operations, the need to understand and manage complex trading risks has never been greater.
Not all investment bankers can re-tool, however: former equities trader Kevin Parker struggled to turn round Deutsche’s asset management arm, and has now been sidelined. Like Deutsche itself, the bank’s new brooms will have to prove that their skills can be adapted to the post-crisis world.