(Bloomberg) -- Deutsche Bank AG Chief Executive Officer Christian Sewing is planning sweeping changes to the lender’s top management, considering replacing CFO James von Moltke and investment banking head Garth Ritchie as he seeks to restructure the troubled lender.
The bank is expected to decide on the future of top 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 frontrunner to replace compliance chief Sylvie Matherat, they said, asking not to be named in disclosing internal deliberations.
Since taking over a year ago, Sewing has moved to replace executives that rose under predecessor John Cryan with mostly German trusted lieutenants. A former Citigroup Inc. treasurer, Von Moltke joined in 2017 and 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, Karin Dohm and Garth Ritchie declined to comment. Matherat didn’t answer an email and Von Moltke couldn’t immediately be reached.
Cold Water
In March 2018, less than a week after the bank sounded a bullish tone in its annual report, Von Moltke poured cold water on the outlook for the securities unit, still the source of most of the bank’s profits. His comment that the investment bank’s revenue would probably be flat in the first quarter rattled investors. He also described Deutsche Bank’s situation as a “vicious circle of declining revenues, sticky expenses, lowered ratings and rising funding costs.”
Sewing didn’t mention Ritchie or Matherat when he highlighted recent turnaround successes in his speech at the annual general meeting, a sign that they may have fallen out of favor.
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 shakeup 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.
Legacy Scandals
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.
Sewing has been working on a fresh turnaround plan to restore investor confidence, after breaking off merger talks with Commerzbank. 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 non-core unit to wind down as much as 50 billion euros ($56 billion) in unwanted assets, a person familiar with the matter has said.
To contact the reporters on this story: Eyk Henning in Frankfurt at ehenning1@bloomberg.net;Steven Arons in Frankfurt at sarons@bloomberg.net
To contact the editors responsible for this story: Dale Crofts at dcrofts@bloomberg.net, Christian Baumgaertel
For more articles like this, please visit us at bloomberg.com
©2019 Bloomberg L.P.
