Deutsche Bank mulling shake-up amid regulatory frustrations: source

[FRANKFURT] Deutsche Bank AG is considering replacing senior executives who tend its relationships with regulators as the authorities express frustration with the firm's efforts to prevent financial crime, according to a person with knowledge of the matter.

Sylvie Matherat, a management board member who serves as the bank's chief regulatory officer, and Tom Patrick, who runs operations in the Americas, are among executives who might ultimately leave, the person said. But for now, no decisions have been made and discussions are continuing, the person said, asking not to be named because the deliberations are confidential.

Kerrie McHugh, a spokesman for the Frankfurt-based bank, declined to comment.

Deutsche Bank is trying to reassure regulators it can improve compliance systems after repeated failures in heading off misconduct. In September, Germany's markets regulator ordered the firm to improve money-laundering and terrorism-financing controls, and took the unprecedented step of appointing a monitor to oversee the efforts. The stock has hit record lows in recent weeks as investors worry that the lender is being drawn into a multibillion-dollar money laundering scandal at Denmark's Danske Bank A/S.

Ms Matherat, a former French central bank official, was promoted to Deutsche Bank's management board under then-chief executive officer John Cryan three years ago. She's the only woman left on the panel after the departure earlier this year of chief operating officer (COO) Kim Hammonds. Already, Ms Matherat has presided over four global heads of anti-financial crime - Ulrich Goeres, Peter Hazlewood, Philipp Vollot and now Stephan Wilken.

Frank Kuhnke, who succeeded Ms Hammonds as COO, has been taking a fresh look at internal processes and implementing projects - such as bolstering so-called know-your-customer documentation - that other managers previously hadn't carried out.

Ms Matherat, meanwhile, has privately told associates she might need to prepare to leave, The Wall Street Journal reported earlier on Tuesday. The newspaper said she has expressed unhappiness to some associates over what she described as constraints on improving controls and mending the bank's relationships with the authorities.

A Danske Bank A/S whistle-blower, who stunned lawmakers by saying he was offered hush money by the company, has estimated that US$150 billion in suspect funds the Danish bank handled were funnelled through another lender that he didn't name. It was later identified by a person familiar with the matter as Deutsche Bank's US unit.

Deutsche Bank serves as a correspondent bank, handling transactions initiated by foreign lenders on behalf of their customers. The German lender has said that as a correspondent bank, "your only relationship is with the bank and the bank itself has the responsibility to check its own client to monitor the transaction and to do all these kinds of checks."

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