Deutsche Bank weighs senior shake-up as CEO purges top ranks

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Deutsche Bank Chief Executive Christian Sewing is planning sweeping changes to his top management, considering replacing finance chief James von Moltke and investment banking head Garth Ritchie, as he purges executives who rose under his predecessor.

The bank is expected to decide on the future of several management members within weeks, according to people familiar with the matter. Sewing may take over control of the investment bank from Ritchie on an interim basis while the bank searches for a permanent successor, one person said. Karin Dohm, head of regulatory affairs, is the front-runner to replace compliance chief Sylvie Matherat, they said, asking not to be named disclosing internal deliberations.

Since taking over a year ago, Sewing has moved to replace leaders who rose under predecessor John Cryan with mostly German trusted lieutenants. A former Citigroup Inc. treasurer who joined in 2017, von Moltke has seen his tenure at times marred by poor communication. Ritchie and Matherat, the subject of longstanding criticism, received the lowest shareholder backing of all top management recently. Ritchie oversees the troubled securities unit while Matherat struggled to end a long series of misconduct and control failures.

Deutsche Bank, Dohm and Ritchie declined to comment. Matherat didn’t answer an email and von Moltke, through a spokesman, declined to comment.

Cold water

Sewing has already replaced the head of the transaction bank, the chief operating officer and the head of anti-money laundering at Deutsche Bank. In October, he named Asoka Woehrmann to succeed Nicolas Moreau as head of the asset management business.

Like Ritchie, Moreau and Matherat, von Moltke joined the top ranks of the bank under Cryan. He hit a rough patch in March 2018 when, less than a week after the bank sounded a bullish tone in its annual report, he poured cold water on the outlook for the securities unit, rattling investors. He also described Deutsche Bank’s situation as a “vicious circle of declining revenues, sticky expenses, lowered ratings and rising funding costs.”

It’s not clear who would replace von Moltke. Alexander von zur Muehlen, another long-term veteran of the bank and Sewing confidant, has been advising the CEO on strategy for the past year. He’s a former group treasurer and also worked at the investment bank.

Ritchie and Matherat have long been the subject of speculation. Sewing didn’t mention either of them when he highlighted recent turnaround successes in his speech at the annual general meeting, a sign that they may have fallen out of favor.

Sewing has vowed to make tough cutbacks to the securities unit, saying that he’s “rigorously focusing” on profitable businesses. That was a departure from previous comments by Chairman Paul Achleitner, seen as a backer of a big investment bank, who has said that he doesn’t see a need for a radical shift in the unit.

Achleitner, who has come under increasing criticism for his oversight, acknowledged at the bank’s annual general meeting last month that he had made some mistakes. At the tense meeting where several investors urged the chairman to step down early, Achleitner assured Sewing of his full backing for measures to revive the lender.

Legacy scandals

Ritchie has been with Deutsche Bank for more than two decades, rising through the ranks in the investment bank before taking it over in a shake-up in late 2015. Multiple cutbacks to the business under his watch have failed to restore sufficient profitability and growth, while past misconduct at the unit continues to haunt it.

In the latest setback for the South African, he was among dozens of current and former Deutsche Bank executives to become a target in a widening German probe of a tax scam involving dividend payments, according to people familiar with the matter.

Matherat, a former deputy director general at the Bank of France, joined Deutsche Bank in 2014 and became a management board member the following year. But the string of legacy scandals that has plagued the bank for the better part of the decade continued unabated under her watch, culminating in video footage of a massive police raid on Deutsche Bank’s Frankfurt headquarters late last year.

If Dohm replaces Matherat, she probably won’t join the management board, the people said.

Sewing has been working on a fresh turnaround plan to restore investor confidence after breaking off merger talks with Commerzbank AG. He’s zeroing in on another round of deep trading cuts that may result in the shuttering of U.S. equities trading, as well as the creation of a noncore unit to wind down as much as 50 billion euros ($56 billion) in unwanted assets, a person familiar with the matter has said.

Bloomberg News