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MarketScreener Homepage  >  Equities  >  Xetra  >  Deutsche Bank AG    DBK   DE0005140008

DEUTSCHE BANK AG

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Deutsche Bank : New man on the board to clean up Deutsche Bank's act

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07/17/2019 | 04:49pm EDT
FILE PHOTO: The logo of Deutsche Bank is pictured on a company's office in London

FRANKFURT (Reuters) - The Qatari-backed lawyer tasked with trying to draw a line under Deutsche Bank's regulatory scandals has risen rapidly at the German bank, jumping to the management board after three years as a "sparring partner" on the bank's supervisory body.

Deutsche Bank is desperate to clean up its act and restore its reputation after years of turmoil including the Libor rate-rigging scandal and money-laundering investigations, and Stefan Simon has an intimate knowledge of the bank's rocky relationships with regulators and courts.

The enigmatic corporate lawyer will soon be sitting on Deutsche's management board, promoted from its external oversight board as part of a 7.4 billion euro (£6.6 billion) overhaul which will see the bank shrink and lose 18,000 jobs.

Simon joined Deutsche's supervisory board three years ago, with the backing of the lender's largest shareholder, Qatar. He played an influential role on that board, impressed his backers and served on the very committee that engineered his own promotion.

The 49-year-old former partner at Bonn-based law firm Flick Gocke Schaumburg has kept largely out of the public eye, but he has worked behind the scenes since his 2016 appointment to shake up Deutsche's management.

"The role of the supervisory board as a sparring partner for the management board...has become more important in recent years," he wrote several months ago.

Simon sits on six of the supervisory board's nine committees, more than any other member other than Chairman Paul Achleitner. His seats include one on the most powerful committee - the chairman's committee, which decides on the appointment and dismissal of management board members.

This month, the supervisory board fired three of the bank's nine management board members, including those overseeing the investment bank, the retail bank and the regulatory chief, the role that Simon himself will fill.

Simon replaces Sylvie Matherat, a former French central banker appointed to Deutsche in 2015. Achleitner last week praised her for enhancing Deutsche's "new compliance and risk culture", but she fell out of favour with regulators and investors as Deutsche repeatedly landed in hot water.

DAMAGED REPUTATION

In 2017, the bank was fined $7.2 billion in the U.S. for its role in the mortgage crisis, nearly toppling the bank. It failed stress tests with the U.S. Federal Reserve, and German regulators took the rare step of condemning the bank for lapses in controls to prevent money laundering.

In November, Matherat sought to downplay Deutsche's role in a money laundering scandal involving Danske Bank and suspicious payments totalling 200 billion euros from 2007 until 2015.

But Simon, as head of the supervisory board's integrity committee, opted to get an independent view and commissioned the law firm Gibson Dunn to advise the board on Danske, a person with knowledge of the matter said.

Gibson Dunn didn't respond to a request for comment.

As a lender to U.S. President Donald Trump, Deutsche has also been subpoenaed by U.S. Congress to hand over information on his finances.

The U.S. Department of Justice is separately investigating Deutsche for trades that authorities said were used to launder $10 billion out of Russia, which has led to the bank being fined nearly $700 million.

In Germany, prosecutors are escalating a money laundering inquiry involving Deutsche Bank using a subsidiary alleged to help clients avoid taxes. Deutsche has said it is cooperating with the investigation and Simon's integrity committee vowed to devote "special attention" to it, according to Deutsche's annual report in April.

When asked last week about Simon, Deutsche's chief executive officer Christian Sewing told analysts: "We have looked for somebody who knows, obviously, our legal portfolio, who has contributed to the clean-up over the last two to three years."

RAPID RISE

At Flick Gocke, Simon advised Deutsche on its involvement in the Libor rate-rigging scandal, according to two people with knowledge of the matter. That helped put him on the bank's and Qatar's radar.

The bulk of Simon's career was focused on mergers and acquisitions, insolvencies and corporate governance. He was made partner after just five years and his clients included the energy company E.ON and the bank HVB, according to Juve, a publication that follows the legal industry.

Simon was "really entrepreneurial", something "untypical" for a lawyer, said Thomas Roedder, a partner at the firm.

He attracted unwelcome attention though, when the founder of one of his clients, an insolvent developer of offshore wind farms, filed a criminal complaint accusing Simon of acting against the interests of the company. Simon denied wrongdoing and prosecutors didn't pursue the suit.

When Simon left Flick Gock to join Deutsche's supervisory board he founded his own firm, Simon GmbH, based in Zurich, locating himself close to where he likes to cycle in the Alps.

He has also tried his hand at acting and film production and had a role in the 2017 film "Dirty Bomb" about wartime Germany.

When he makes the switch to the management at the end of July, his income from the bank is set to increase to at least 2.4 million euros, plus bonus, from the 488,000 euros he earned last year from the bank.

It is unusual for someone to jump to management from the supervisory board, but not unheard of. Former CEO John Cryan made the shift. Regulators are likely to have informally signed off on Simon's appointment, three people with knowledge of the matter said.

Deutsche Bank declined to comment and a spokesman for Simon declined to be interviewed.

(Reporting by Tom Sims; Editing by Elaine Hardcastle)

By Tom Sims

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Financials (EUR)
Sales 2019 23 756 M
EBIT 2019 -1 297 M
Net income 2019 -5 289 M
Finance 2019 10 342 M
Yield 2019 -
P/E ratio 2019 -2,59x
P/E ratio 2020 32,5x
EV / Sales2019 0,10x
EV / Sales2020 -0,40x
Capitalization 12 720 M
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Mean consensus UNDERPERFORM
Number of Analysts 27
Average target price 6,60  €
Last Close Price 6,15  €
Spread / Highest target 46,5%
Spread / Average Target 7,48%
Spread / Lowest Target -34,9%
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Managers
NameTitle
Christian Sewing Chief Executive Officer
Karl von Rohr Co-President & Chief Administrative Officer
Garth Ritchie Co-President & Co-Head-Corporate & Investment Bank
Paul Achleitner Chairman-Supervisory Board
Frank Kuhnke Chief Operating Officer & Member-Management Board
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