October 13, 2014

Moral purge sees ‘disruptive’ Deutsche Bank staff quit for hedge funds

Co-head of investment banking reveals tough approach to staff, meaning some seeking out ‘less regulated spaces’ to work

An attempt to root out bad behaviour at Deutsche Bank has led to the departure of staff, according to one of the most senior executives at the German bank.

“We are definitely seeing leakage,” Colin Fan, co-head of investment banking at Deutsche Bank told the Financial Times. Fan had earlier this year appeared in a video telling staff not to “brag or to be vulgar or indiscreet”.

The industry is trying to clean up its reputation following a string of scandals. Other banks, notably Barclays, are keen to show they are clamping down on risks that could lead to further regulatory action.

Fan told the FT that Deutsche was taking a tougher approach to staff. “Take somebody who’s produced millions of revenues but is sometimes a bit disruptive: how do you judge them against somebody who has lower financial performance but is a great culture carrier?

“We used to have those debates. Today, it’s not even a debate. The first group gets knocked out of that year’s promotion process.”
Those bankers who are “purely financially driven” are going to work in “less regulated spaces” such as hedge funds, said Fan.

Antony Jenkins, promoted to the helm of Barclays in the wake of the Libor-rigging scandal in June 2012, had told staff their bonuses would be asssessed on their adherence to the bank’s principles and values.

“My message to those people is simple: Barclays is not the place for you. The rules have changed. You won’t feel comfortable at Barclays and, to be frank, we won’t feel comfortable with you as colleague,” the Barclays boss said last year.

The banking industry is also facing tougher a regulatory regime, including a new criminal offence if banks go bust. This is said to have sparked the decision of at least one member of the board of the UK arm of HSBC to quit.

The Bank of England governor, Mark Carney, is said to back the new rules. “If you are the chairman or the head of the risk committee, you have a responsibility for the activities of that institution,” Carney told the FT. “If you don’t think you can do it, you shouldn’t be on the board”.

Source: Financial Times – 13th of October 2014