So, Garth Ritchie may soon be vacating Deutsche Bank. The Financial Times reported yesterday that Ritchie could be leaving imminently because of, "disagreements about cuts" at the investment bank he manages. Deutsche Bank isn't commenting and Ritchie is denying the rumours, insisting that he's "completely committed" to his job. But the genie is most definitely out of the bottle and floating freely around the room - Handlesblatt says Deutsche is already thinking of looking both internally and externally for Ritchie's replacement.
Should Ritchie go? He has his detractors. "On January 1 2016 when Garth joined the management board, Deutsche Bank's stock was at €17. Today it's below €6," complains one Deutsche managing director. "He's made no really major changes to the fixed income management team," complained another. "- He's very good from a leadership perspective and is great in terms of camaraderie, but beyond that he is relying on the same people we're relied upon before."
Ritchie's already dented popularity was further buffeted following the release of Deutsche Bank's compensation report in March. This showed Deutsche being very generous to its most senior staff and a lot less generous to everyone else. Ritchie himself had his pay doubled to €8.6m, including an extra €250k a month just to manage Brexit. "We have reached the point in the story where the leaders of the banana republic are just loading up planes with cash," complained one MD in response. "Senior guys just below Garth are known to “feather their nests” with a significant amount of the bonus pool and won’t pay front office," alleged another - saying that Ritchie should put a stop to such goings-on.
Deutsche's investment bankers may, however, want to be a bit careful what they wish for. Ritche's objectives for 2018 included 'refocusing' the corporate and investment bank, building closer ties with UK regulators and improving internal communication and culture. He failed at some of these - reportedly 'only' achieving 80% of his individual objectives last year. Whoever replaces him may want to refocus the investment bank a lot more aggressively.
And who would replace him? Tim Throsby is on the market, if you're happy to also have his painting of a naked Minotaur. Christian Meissner is also knocking about, and was last seen in New York. Internally, someone like Ioannis "John" Pipilis, who runs Deutsche's fixed income business, might try to seize the moment, although Pipilis is less popular with Deutsche's investment bankers. Marcus Schenck, whom Ritchie beat to the role as sole head of the investment bank, presumably won't be coming back now that he's safely ensconced at Perella Weinberg as an investment banker.
That Ritche's exit is being discussed at all is symptomatic of the instability at Deutsche Bank. After all, he was only promoted to head of the investment bank in May 2018, and his contract was extended for five years in September. In theory, this should give Ritchie plenty of time to turn the business around. In reality, he appears to be balking at the turns he's being asked to make. Ritchie already threatened to leave in April 2018, but was persuaded to stay with a big promotion. This time he might leave for real - although he's reportedly demanding a big payout if he does. This complicates matters further: Deutsche is trying to cut costs. An expensive Ritchie exit might incline CEO Christian Sewing to trim even more heads or to deplete the 2019 bonus pool to compensate. Whether Ritchie stays or goes, it looks very painful.
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