There was a pretty lively response to my most recent commentary on the goings-on and changes at the top of Credit Agricole at the end of last week. My favourite comment was this: “more useless French timeservers to replace the previous useless French timeservers?” Beyond the fact that it was suffixed by a question mark that perhaps detracted from its full force, I couldn’t possibly comment.
I had originally said in that piece that senior executive churn was hardly a novelty in today’s transforming banking landscape (which it isn’t), and I’d made reference to those at-the-time just-announced management board changes at Deutsche Bank. In the event, it didn’t make it into the final version, but DB’s US$55m fine from the SEC (ably assisted by BaFin and the FCA) for allegedly cooking the books during the financial crisis has given me a second bite of that story.
In truth, there’s not much new to say about the fine. Except the bank’s defence – that it didn’t value properly gap risk on its credit correlation book because “it did not believe there was a reliable method for measuring [it]” in the cataclysmic post-Lehman market conditions – sounds rather implausible, As it turned out, there was no reliable model for measuring almost anything during that period. Unreliable modelling was, of course, a central cause of the crisis but that didn’t stop anyone pretending.
There might not be much to say about the fine but there is about the degree of management turnover at DB, which looks pretty extensive on paper. But then again I wonder. The Enforcer aka supervisory board chairman Paul Achleitner has certainly moved with alacrity to stem the flow of negative sentiment around the bank’s poorly received Strategy 2020. But are the latest moves any more than aimlessly moving the chairs around? Or just aimless?
The changes boil down to the following:
• Anshu Jain takes direct responsibility for strategy and organisational development from former CFO Stefan Krause.
• BUT Fabrizio Campelli, head of group strategy, gets additional responsibility for … strategy and organisational development reporting to Jain i.e. will do all the work. He also becomes deputy COO to current COO but soon to become (the industry’s first?) Chief Digital Officer Henry Richiotte.
• Direct control of GTB wrenched from Jain (a business he had evangelised) in favour of Krause. Krause also gets non-core ops from Fitschen and the chairmanship of Postbank. He’s tipped by some for future greatness. That said, you know what always happens to the blokes running non-core: they end up being non-core too.
• Alan Cloete (Asia-Pacific co-CEO), Colin Grassie (UK CEO), and Rainer Neske (head of the private and business clients division) selected to spend more time with their families. (The ‘we’ in Achleitner’s optically harsh comment about Neske: “given the new strategic direction of our Private & Business Clients business, we agreed that new leadership would be needed” unlikely to have included Neske.)
We’re told the essence of the changes is that individual managers are now aligned to the six key decisions announced as part of Strategy 2020. If Strategy 2020 ends up being a bust, that’s six more bankers selected to spend more time with their families and half a dozen more notches in Achleitner’s gun.
Jain’s elevation even from his former lofty position as co-CEO to the man now solely tasked with delivering the results of the new programme may look flattering. But on the other hand, putting him alone on that platform makes him a much easier target. This is surely the last throw of the dice for Jain. If I were a betting man, I would imagine the odds of him making it to the end of his contract are lengthening. What am I bid to go short?
