November 23, 2016

Deutsche Chair Ought to Have Both Hands on Wheel

by Breakingviews.

Quid Paul quo

Paul Achleitner deserves to stay in his main job, as chairman of Deutsche Bank – but he could build investors’ trust by giving up his others. The German lender said on Nov. 21 that its board had unanimously agreed that Achleitner would be put forward for re-election next May. It is easy to see why some shareholders are dissatisfied: since the ex-Goldman Sachs partner took the role in mid-2012, Deutsche Bank’s shares have almost halved and its legal bills have multiplied.

There are several good reasons to keep Achleitner on. Stable leadership is a must as Deutsche Bank, under Chief Executive John Cryan, attempts a mammoth restructuring that will include cutting at least 10,000 jobs. Markets would probably react badly to the idea of Deutsche inserting a callow new chairman, especially after the leak of a U.S. Department of Justice demand for a $14-billion mortgage securities settlement sent its shares plummeting in September.

Achleitner’s medicine for Deutsche also looks right. Former co-Chief Executives Anshu Jain and Juergen Fitschen both got the chop in 2015, though months too late. A wider management clear-out a year ago was comprehensive, and tackled charges from regulators that the bank’s executives had obstructed probes into alleged rate-rigging. Achleitner himself was cleared of similar interference. However, Deutsche’s handling of its problems has not been flawless: the removal from Deutsche’s board of Georg Thoma, who had pushed for more in-depth scrutiny of management and board behaviour, looked oddly defensive.

Being the chairman of a big investment bank, especially one as troubled as Deutsche, is a full-time job. Achleitner’s board roles at German carmaker Daimler and chemicals firm Bayer thus create an unwelcome distraction. Daimler operates in an industry under massive scrutiny since rival Volkswagen’s scandal over emissions-testing. Bayer, meanwhile, is pursuing a giant takeover of U.S. seeds company Monsanto. At a youngish 60 years old, Achleitner may feel he has the energy to do all three jobs simultaneously. But the chairman of Deutsche Bank ought to have both hands on the wheel.


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