Deutsche Bank's Hammonds Leaves as Exits Continue After CEO
(Bloomberg) -- The chaotic shakeup at Deutsche Bank AG sent more aftershocks through the bank’s top ranks as its chief operating officer was ousted and its head of investor relations quit.
Kim Hammonds, who reportedly called Deutsche Bank “the most dysfunctional company” she’d ever worked for, will leave “by mutual agreement” at the annual general meeting on May 24, the Frankfurt-based lender said late Wednesday. Earlier, the bank announced that John Andrews, head of investor relations for five years, is leaving because of the recent management changes.
Their exits come days after Christian Sewing took over as chief executive officer from John Cryan amid a sustained slump in the share price and questions about the direction of Europe’s largest investment bank. Sewing’s appointment was the third major change at the top of Deutsche Bank in six years, and followed weeks of intense speculation about Cryan’s future while Chairman Paul Achleitner stayed silent. Marcus Schenck, co-head of the securities unit, also left as the company debates how big a role it wants to play in global investment banking.
“The way Achleitner replaced the CEO was unprofessional and damaging for everyone involved,” Klaus Nieding, vice president of shareholder advisory DSW, said by phone before the departure of the COO was announced. “But Hammond’s demise is of her own making. She shouldn’t have made those comments,” he said, referring to the “dysfunctional” remarks made at an internal event in March.
The bank may use Hammonds’s departure to cut the size of its management board and hand her responsibilities to another board member, German newspaper Handelsblatt reported Thursday. It suggested that Chief Administrative Officer Karl von Rohr, who was promoted to co-president in the reshuffle earlier this month, is the likeliest candidate, without citing any named sources.
Handelsblatt also suggested that cutting a board position with specific and exclusive responsibility for IT could raise eyebrows at Germany’s banking regulator Bafin, given the bank’s past problems with the issue. A spokesman for Deutsche Bank declined to comment, while a spokesman for Bafin said that there is “no legal requirement” for the bank to make IT a board-level competence. “It is purely a business policy decision,” he said.
Hammonds had been tasked with bringing the bank’s information technology costs down and streamlining the number of operating systems. But concerns about slow progress have led to skepticism among supervisory board members and management that she’s the right person, people familiar with the matter said earlier this month. Her standing was hurt further when reports surfaced about her disparaging comment. Hammonds hasn’t disowned the remarks since they became public.
“Kim Hammonds has been a breath of fresh air, bringing an outsider’s perspective with deep experience in transformational change,” Achleitner said in the release. The bank will appoint a new COO “in the near future,” after consulting with regulators, it said.
Deutsche Bank was down 0.4 percent as of 1:30 p.m. in Frankfurt, bringing losses this year to 27 percent. That makes Deutsche Bank the second-worst of the 42 companies in the Bloomberg Europe Banks and Financial Services Index, with only state-rescued lender Banca Monte dei Paschi di Siena SpA declining more.
Achleitner himself has come under fire for his part in the upheaval. Board members and investors have criticized him for weeks of media leaks about his hunt for a new CEO, his failure to find credible external candidates and his choice of Garth Ritchie as head of the investment bank, people familiar with the matter have said. The 61-year-old faces a rough ride at Deutsche Bank’s annual shareholder meeting in May from investors who say he’s as much to blame as Cryan for the lender’s woes.
Cryan was unable to restore revenue growth after cutting risk, though he did manage to settle billion-dollar legacy misconduct cases and shore up capital. Last year, he raised 8 billion euros ($9.9 billion) from investors in a share sale. This year, he sold a minority stake in Deutsche Bank’s DWS asset management business in an IPO.
Investor relations chief Andrews, who previously held the same post at Citigroup Inc., Morgan Stanley and Goldman Sachs Group Inc., played a key role in both transactions. He will be replaced by James Rivett, currently head of fixed-income investor relations, according to a memo to employees signed by finance chief James von Moltke.
“John feels that this is the right time to take this step with the leadership changes recently announced,” von Moltke wrote. “John has helped the bank navigate many challenging and important milestones.”
In a separate development, at least four investment bankers at Deutsche Bank’s London office are leaving, people familiar with the matter said Wednesday. The departures include Guillaume Gnech, a director in equity derivatives trading, Neal Naidoo, who worked in systematic trading, and Jonny Edelman in hedge fund sales.
©2018 Bloomberg L.P.