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If you thought of the worst possible decision that Christian Sewing could make regarding the staff, what elements would come in? Something that would, at one time, exacerbate all regulatory problems, worsen Deutsche's reputation for a toxic substance management culture and take a step back for diversity and representation? If the WSJ's report on the "high-level reshuffle" currently under study is correct, it would be hard to think of anything more destructive than the plan that Deutsche's board is currently considering.
There are two senior executives who are apparently about to be deported; Tom Patrick, Regional Director General for the Americas and Sylvie Matherat, Regulatory Officer. These are probably related problems; In large part, the problems of Deutsche in the United States are its regulatory problems and vice versa. The bank has been hit by a flood of bad news about its financial crime prevention systems and it is understandable that Christian Sewing is not happy about it.
What is less understandable is why anyone would consider this to be Sylvie Matherat's fault. The recent major financial bankruptcies of Deutsche were the Russian mirror transactions scandal, which affected companies between 2012 and 2015, and its relations with Danske Bank Estonia, which were closed in 2015. Matherat has joined Deutsche qu & # In 2014, the board of directors was promoted in 2015, it seems that this is the worst type of scapegoat to hold it responsible for these problems. This is a move that seems unlikely to impress the Federal Reserve. This may further damage relations with European regulators. And, by placing Deutsche bank on a board of directors composed of 100% men, the situation is not very good overall.
Tom Patrick also looks like a scapegoat. It is certainly true that Deutsche on the American continent is a very disturbed franchise. It is also clear that his problems did not start suddenly in August 2017, when Patrick was appointed. Meanwhile, he was tasked with trying to oversee a complete overhaul of Deutsche's technology and information systems, while the administrative center reduced his budgets. If and when he leaves, Mr. Patrick's replacement will be the fourth Regional CEO in three years. This is less time than a Premier League manager and it is extremely difficult to understand why another person (even an internal appointment; Patrick was previously a well-considered stock manager) would assume that position.
It is therefore difficult to avoid the feeling that short-term thinking and messenger firing have been incorporated into Deutsche Bank's DNA. Christian Sewing is at work mainly because the supervisory board lost patience with John Cryan. It now seems to replicate the same decision model at a lower level of the management chain. It can be argued that the underlying problem is that there is a reluctance to face the fact that the problems of Deutsche Bank are deeply rooted; the clutter of complex business sectors and incoherent technologies has accumulated over two decades and can not be resolved in a few years, especially if leaders change constantly …
Separately, it would be somewhat ironic that one of the first consequences of Brexit in the investment banking sector is that European companies will be able to free themselves from the impasses of excessively burdensome UK regulation. But that could happen if Robert Ophele of the French securities regulator was there.
The regulation in question is the "MiFID Research Regime 2", the rule that European (and increasingly global) brokerage firms must invoice research separately rather than divest research and make a profit on the research. brokerage commissions. Since it was implemented at the beginning of the year, this has had a significant impact on sales revenues, leading to the bankruptcy of several brokerages or the merger of several sales. And that has always been a particular enthusiasm of the British Financial Conduct Authority; other European regulators were either lukewarm or actively opposed. Now, Ophele says publicly that the rule has not worked for companies or investors and should be reversed in the first review of legislation. This could be a lifeline for small stocks and fixed income homes, and of course an incentive to do business in Paris rather than in London.
Meanwhile…
Demonstrating how restrictive MiFID research rules are, 82 percent of large companies use fewer search providers this year, and one-third of them adopt the unbundled approach globally, according to a survey. from ICMA to fixed income investors. (Market Media)
As in many recent cases, the length and costs of a regulatory investigation can be a punishment in itself. Tim Hayward of GAM has been suspended for over two months without a public statement (Finews)
A survey of headhunters indicates that hedge fund compensation is down 10% on average, mainly due to weak performance in the sector. It should be noted that some brand names in the long / short equity segment have been particularly affected. (FT)
Among several other issues raised in his article on Facebook, The Economist points out that employee morale suffers, the work atmosphere qualifies as "horrible" in career review applications (Economist).
Ten major cryptocurrency traders (including Mike Novogratz) formed the Association for Digital Asset Markets, a professional association with the goal of promoting a code of conduct and losing the image of "Wild West". (Bloomberg)
But Goldman Sachs still thinks there are too many regulatory issues associated with this space to be able to offer custodial services for customers' encryption assets (Bloomberg).
GS recruitment record compared to UBS in the last year (Business Insider)
And is this a sign of saturation of the market? Conference on crypto and blockchain in North Korea (Finews)
The alternative data team UBS Evidence Lab opens and disseminates its knowledge to external clients (Institutional Investor)
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