Deutsche Bank braced for loss of investment bank chief
Garth Ritchie said to be concerned by Christian Sewing’s cuts and lack of shareholder support
Deutsche Bank’s top investment banker could quit the lender because of disagreements over cuts and a lack of support from shareholders, say senior figures at the bank.
Garth Ritchie is worried by the radical cuts to his business proposed by group chief executive Christian Sewing, and is concerned that some of the plans could backfire, the people said.
He has also been weakened by a large protest vote against him at last week’s annual meeting. He was only supported by 61 per cent of the shareholders and a Qatari investment vehicle — which is among the bank’s largest shareholders — voted against him.
Two people who attended the bank’s internal drinks reception after the meeting said that Mr Ritchie discussed with Mr Sewing and chairman Paul Achleitner whether the vote was as damaging for him as a similarly poor 2015 vote had been for then-CEO Anshu Jain. Mr Jain resigned shortly afterwards.
They concluded that this year’s outcome was less harmful given that investor voting behaviour had become more aggressive in recent years.
Mr Ritchie was not the only executive facing questions after the annual meeting. Regulatory chief Sylvie Matherat suffered a similar number of votes against her and is expected to depart sooner rather than later, according to senior figures at the bank. Some of her responsibilities are already being merged with units overseen by other managers.
Mr Sewing in a speech later at the drinks reception stressed that individual results did not matter. “We are all in this together,” Mr Sewing said according to one participant.
Nevertheless one of the people close to the supervisory board told the Financial Times that it would be “negligent” not to prepare for a potential resignation of the investment banking boss.
A second senior insider said: “Garth is not going to be forced out but he may decide he can’t accept the decisions on aggressive cutbacks that he is going to have to implement.”
Senior investment bankers are concerned that closing large swaths of the US equities and rates businesses would trigger an immediate decline in revenue while costs would remain high.
But one senior manager said that such radical action was necessary, even if it meant things getting worse before they get better. “It’s a classic J curve but we have no choice. We have to be radical,” he said.
“The plan needs to come in weeks and not months now that the direction of travel is clear,” said one person close to the supervisory board.
On Sunday evening, Mr Ritchie told the Financial Times: “I am completely committed to my task as president and as the head of the corporate and investment bank of Deutsche Bank and I am completely aligned with our CEO Christian Sewing on our plans.”
The 51-year-old South African, who has worked at Deutsche for more than two decades, toyed with leaving in the autumn of 2017 as well as in the spring of 2018, but on both occasions was convinced by Mr Achleitner to stay.
In late 2017, he was promised an extra €3m in fixed pay per year until 2020 for overseeing the lender’s Brexit preparations.
Should he leave, fixed-income boss Yanni Pipilis, US head Mark Fedorcik and division president Ram Nayak are seen as the most likely internal successors. Stefan Hoops, a confidant of Mr Sewing who heads the global transaction bank, may be another potential successor.