Deutsche Bank’s Watchdogs Are Skeptical of New Board Nominee

(Bloomberg) -- Some of Deutsche Bank AG’s top financial supervisors have doubts that Chief Executive Officer Christian Sewing’s latest pick for the management board is qualified for the job.

Several watchdogs are worried that Michael Ilgner, hired as head of human resources from a small non-profit, doesn’t have experience leading large organizations or the banking background needed to join the top executive body, said people familiar with the matter, asking not to be identified discussing the private information. European Central Bank approval is required for an employee to join the management board, but banks can fill positions below that level at their discretion.

“We have said that we have hired Michael Ilgner with a long-term perspective,” said a spokesman for the bank. “He is designated to join the management board when the regulatory requirements are met. There is no reason at all to hurry.” He said that Fabrizio Campelli’s appointment as board member responsible for transformation and human resources ensures “a well-functioning governance structure.”

A spokeswoman for the ECB declined to comment.

The supervisors’ reservations mark the second time in as many months that Deutsche Bank’s leadership decisions have raised eyebrows. In October, supervisory board member Juerg Zeltner decided to resign from the board of directors a month into his tenure after regulators saw a conflict of interest in his role as CEO of a rival wealth manager, people familiar with the matter have said.

Sport Aid

Deutsche Bank announced the hire of Ilgner on Nov. 1. A former water polo player in the German Olympic team, he leads the non-profit German Sport Aid Foundation that caters to professional athletes and has about 40 staff. He has never worked in a bank. His group has a yearly budget of 18 million euros ($19.9 million) for grants, according to its website. Deutsche Bank’s bonus pool last year was more than 100 times bigger.

Deutsche Bank’s workforce is currently around 90,000, with Sewing planning to cut a fifth of that over the coming years. Ilgner will take over as senior group director in March, and will keep that position for as long as he doesn’t have the required regulatory approval to join the management board, the bank has said.

The ECB demands that lenders under its supervision ensure management board members have relevant practical experience. When evaluating whether that’s the case in a so-called fit-and-proper assessment, the ECB checks “previous positions held, taking into account the length of service, the size of the entity, responsibilities held, number of subordinates, the nature of the activities carried out, the actual relevance of experience gained, etc.,” the guidelines say.

Sewing, in announcing Ilgner’s hire, acknowledged that “some may now ask” what qualifies the head of a sports foundation to run human resources at a global bank. The CEO praised his “passion and his fresh approach” and said Ilgner’s track record of helping to develop athletic talent would enable him to introduce “fresh ideas” to Deutsche Bank’s workforce management.

Sewing, who is a supervisory board member of the non-profit, said he was “deeply impressed” by Ilgner after meeting him, according to a memo seen by Bloomberg.

Dual Role

Deutsche Bank reached out to regulators before announcing Ilgner’s appointment, according to two people with knowledge of the matter.

Some regulators have also voiced concern over Sewing’s extensive responsibilities as CEO and head of the investment bank. Watchdogs say they’d prefer him to hand oversight of the securities unit to someone else so he can fully focus on his main role, people familiar with the matter said earlier this month.

Ilgner isn’t the first executive to join as a designated management board member while waiting to get on-the-job experience for regulatory clearance. Bernd Leukert, a former senior executive at German software company SAP SE, joined on Sept. 1 and will move to the board once regulators approve.

Deutsche Bank also previously hired senior executives who didn’t have banking experience and still joined the management board later, most notably former Chief Operating Officer Kim Hammonds. She came from airplane maker Boeing Co. in 2013 and was appointed to the board three years later.

To contact the reporters on this story: Nicholas Comfort in Frankfurt at ncomfort1@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

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