Anshu Jain has asserted his authority in the latest round of restructuring
For more than a decade, Deutsche Bank has been run by a former investment banker (Josef Ackermann), and since 2005 it has styled itself as a ‘global investment bank’ instead of just a ‘bank’. But only now has the investment bank finally completed its takeover of the group under Anshu Jain.
Jain, who becomes group co-chief executive with Jürgen Fitschen in May to replace the retiring Ackermann, has long represented the beating heart of Deutsche Bank out of London, even if its head is based in Frankfurt.
The corporate banking and securities division that he has run on his own since the retirement of co-head Michael Cohrs in 2010 has generated €11.3bn of Deutsche Bank’s €14.6bn in pretax profits over the past three years – an impressive 78%.
In the restructuring that leaked out this week – and which is still subject to approval by the supervisory board this month – Jain and his colleagues at the investment bank have tightened their grip on the group, effectively completing a clean sweep. How so?
The seat of power
Deutsche Bank is effectively run by two powerful groups: the seven member management board and the 12 member group executive committee.
Just two of the members of the management board today – Ackermann and Jain – hail from the investment banking side of the business, although Jain is the only member who officially represents the division. Five of the 12 members of the executive committee are also from the investment bank – Ackermann, Jain, Kevin Parker (the former head of equities who runs asset management), Rob Rankin (the CEO of Deutsche Bank in Asia who was an investment banker at UBS for 20 years), and Seth Waugh (the CEO of Deutsche Bank in the Americas who used to run investment banking and markets in the region), although again only Jain officially represents the investment bank.
Fast forward to the new look Deutsche Bank and the picture is very different. With the departure of Ackermann, chief risk officer Hugo Bänziger and chief operating officer Hermann-Josef Lamberti, the new look management board will have four members from the investment bank. These include Jain; Stephan Leithner, the current co-head of investment banking advisory who has been promoted to a new role of chief executive of the group in Europe outside Germany; William Broeksmit, who joined the bank from Merrill Lynch with Jain in 1995 and who takes over as chief risk officer; and Henry Ritchotte, chief operating officer for the investment bank who also joined from Merrill in 1995 and who takes over as group COO.
A clean sweep
On the group executive committee, the takeover by the investment bank is even more of a clean sweep. Six of the 12 members of the old GEC are known or expected to be stepping down (Ackermann, Bänziger, Lamberti. Parker, Waugh and Pierre de Weck, who runs wealth management). The bank is also understood to be expanding this group from 12 to 17 members.
So far, just 14 of these names are known, and of these 14, nine of them – that’s two thirds – are effectively from the investment bank: Jain; Colin Fan (head of credit and emerging markets trading who has been promoted to co-head of the investment bank); Rankin (who joins Fan as co-head of the investment bank); Leithner; Broeksmit; Ritchotte; Colin Grassie (a former capital markets banker who is chief executive of the bank in the UK); David Folkerts-Landau (head of research); and Michele Faissola (head of rates and commodities who was a strong contender to replace Jain but who has a new role as head of a newly-combined asset and wealth management division). In fairness though, it should be noted that while they are investment bankers by trade, both Grassie and Rankin report in their current roles trhough the group structure to Fitschen.
Other members of the GEC will be announced in the next few weeks and months – for example a new head (or co-heads) of the Americas and of Asia - and no doubt more of these will also come from the investment bank.
Deutsche Bank is clear that this does not mean it is about to dump its other businesses. Far from it: Deutsche Bank has reaffirmed its commitment to a universal banking model, and plans to continue the integration of the past few years between the investment bank and transaction banking, as well as developing closer co-operation between the investment bank and the new asset and wealth management division under Faissola.
Indeed, you can argue that the paradox at Deutsche Bank over the past decade is how little the division has been represented on the management board and GEC, both of which have been dominated by other divisions and group support functions.
That imbalance has now been corrected, and finally – 17 years after the launch of the Deutsche Bank project back in 1995 – the reverse takeover of Deutsche Bank by its investment bank is complete.
For a full list of the management changes at Deutsche Bank click here