Deutsche Bank revamps controls as new lapses threaten turnaround

[FRANKFURT] Deutsche Bank revamped the units seeking to detect and prevent financial crimes after a number of recent compliance issues risk undermining progress in chief executive officer Christian Sewing's turnaround plan.

Chief administrative officer Stefan Simon, in a memo to employees Tuesday, announced a reorganisation of his business into six units, with the aim of reshaping the bank's anti financial crime efforts. As part of the changes, Mary Kirwan, a former Credit Suisse Group executive, and Jan-Gerrit Iken from Commerzbank will join.

"The goal of this new setup is to become more effective in all areas, but especially in the fight against financial crime," Mr Simon said in a memo seen by Bloomberg. "The aim is always to have a global overview of the remediation requirements of our regulators worldwide and to centrally manage these requirements."

The moves come as Germany's largest lender contends with a string of new issues that threaten to overshadow a successful first half of Mr Sewing's four-year turnaround plan.

German regulator BaFin in April expanded the mandate of its anti-money laundering monitor at Deutsche Bank, while the Federal Reserve admonished the lender over ongoing compliance failures.

There's an internal investigation into alleged misselling of derivatives in Spain, and chief risk officer Stuart Lewis is facing a probe over his role in dividend arbitrage transactions known as Cum-Ex.

"We have significantly strengthened our control systems, but there is still work to do," Mr Sewing said in his speech at Deutsche Bank's annual general meeting in May. "We are still not fully meeting our regulators' expectations, nor our own."

Mr Sewing has been reshuffling his top leadership since March, when the bank announced the departures of chief operating officer Frank Kuhnke and risk head Mr Lewis. As part of that revamp, Mr Sewing also named Fabrizio Campelli to oversee the investment bank and the corporate banking unit, and he transferred responsibility for compliance and anti-financial crime from Mr Lewis to administrative head Mr Simon.

Mr Simon has since promoted Joe Salama to head the anti financial crimes unit. And only last week, Mr Campelli hired another executive - Patricia Sullivan - as head of financial crime business oversight for the two divisions overseen by him, to "help protect the bank and all of us against the kind of failings that damaged our reputation in the past".

Mr Sewing said at the AGM in May that Mr Simon and Mr Salama would be working "on the details" of the lender's new anti-financial crime strategy in the subsequent weeks.

BLOOMBERG