Deutsche Bank makes management changes after setbacks

Bloomberg

Deutsche Bank AG’s management changes have yet to run their course. Germany’s largest lender is replacing senior executives in the US and is considering changing staff who tend its relationships with regulators, according to a person with knowledge of the matter. The moves come on the heels of strong cuts to the US operations and after authorities in the country — and in Europe — expressed frustration with the firm’s efforts to prevent financial crime.
Sylvie Matherat, a management board member who serves as the bank’s chief regulatory officer, and Tom Patrick, who runs operations in the Americas, are among executives who might ultimately leave, the person said. For now, no decisions have been made and discussions are continuing, the person said, asking not to be named because the deliberations are confidential.
Deutsche Bank has appointed James Davies to succeed Zia Huque as head of US debt trading, according to a person familiar with the matter. Though Huque will remain head of the bank’s US broker dealer, it’s not clear how much longer he will stay for, the person said. Earlier this month, the bank’s US head of municipals, Dennis Tupper, also left and was replaced with Nir Vidra, according to a memo seen by Bloomberg. Kerrie McHugh, a spokeswoman for the Frankfurt-based bank, declined to comment.
Deutsche Bank is trying to reassure regulators it can improve compliance systems after repeated failures in heading off misconduct. In September, Germany’s markets regulator ordered the firm to improve money-laundering and terrorism-financing controls, and took the unprecedented step of appointing a monitor to oversee the efforts. The stock has hit record lows in recent weeks as investors worry that the lender is being drawn into a multibillion-dollar money laundering scandal at Denmark’s Danske Bank A/S. Deutsche Bank was down 0.7 percent at 8.6 euros in Frankfurt as of 12:20 p.m. The stock has declined about 46 percent this year.

ADDING TO CHANGES
Matherat, a former French central bank official, was promoted to Deutsche Bank’s management board under then-Chief Executive Officer John Cryan three years ago. She’s the only woman left on the panel after the departure earlier this year of Chief Operating Officer Kim Hammonds. Already, Matherat has presided over four global heads of anti-financial crime — Ulrich Goeres, Peter Hazlewood, Philipp Vollot and now Stephan Wilken. Her management style can be tough at times, according to people who know her.
Matherat declined to comment. Frank Kuhnke, who succeeded Hammonds as COO, has been taking a fresh look at internal processes and implementing projects — such as bolstering so-called know-your-customer documentation — that other managers including Matherat previously hadn’t carried out. Some present at a supervisory board meeting in the summer where Kuhnke’s progress was discussed considered his successes to be an embarrassment for Matherat, according to people with knowledge of the matter.
At least one top financial regulator has been disappointed in Matherat’s progress in changing the bank’s controls, a person familiar with the matter said, asking not to be identified discussing the private details. It’s not clear if the regulator still sees Matherat as the right person for the job.