Deutsche Bank’s new CEO takes sober look at ‘ugly’ investment bank

Christian Sewing’s appointment as chief executive and the abrupt departure of his predecessor John Cryan holds out the prospect of radical change at Germany’s flagship lender. (Shutterstock)
Updated 09 April 2018

Deutsche Bank’s new CEO takes sober look at ‘ugly’ investment bank

  • Deutsche is already in the middle of a global review of the investment bank, known internally as Project Colombo.
  • Christian Sewing warned of tough decisions ahead: “The time pressure is on and the expectations are high from all sides.”

FRANKFURT: Deutsche Bank’s new chief executive faces the same strategic problem that has long preoccupied its top management — whether or not to override the rainmakers and big earners at its powerful investment bank to shrink that business.
Christian Sewing’s appointment as chief executive on Sunday and the abrupt departure of his predecessor John Cryan holds out the prospect of radical change at Germany’s flagship lender, which has been slower than rivals to reform after the financial crash.
Sewing expects to complete an initial review of Deutsche’s investment bank within weeks, according to a person with knowledge of the matter, but any overhaul he launches is likely to take much longer.
“They’ve had to come around and painfully admit their investment banking baby is quite ugly,” said Octavio Marenzi, CEO of consultancy Opimas. “That’s an emotional issue for them.”
The debate over the investment bank’s future heated up over the past two weeks as Deutsche Bank Chairman Paul Achleitner intensified a search for a CEO to replace Cryan, the Briton he had installed less than three years ago to clean up the bank.
Deutsche is already in the middle of a global review of the investment bank, known internally as Project Colombo, to determine the way forward as revenues shrink and clients and staff leave.
The appointment of Sewing — with a background in retail banking, auditing and risk — along with the resignation of one of Deutsche’s top investment bankers, Marcus Schenck, suggests a shift away from the investment bank, analysts and investors say.
The 47-year-old CEO warned staff on Monday of tough decisions ahead. “The time pressure is on and the expectations are high from all sides,” Sewing wrote in a letter to staff.
But it will be hard to reverse the investment bank’s drive to compete with Wall Street that dates back to the 1990s. Employees say it resulted in the creation of fiefdoms and rivalries that proved difficult for any CEO to control.
The investment bank debate is tricky for Sewing because he is not an investment banker. He joined Deutsche out of school at age 19 at a branch in Bielefeld in north-west of Germany. He was crowned CEO in a hastily arranged board call late on Sunday.
The bank’s major shareholders and top managers are also divided over how to proceed, with some favoring further investment in investment banking and others retrenchment.
Some analysts have said that even modest exits from specific business areas could erode revenues at the investment bank, which generates just over half the group’s total.
The future of the investment bank is just one of many problems for Sewing, the third head of the bank in six years. He also has to tackle high costs, heavy losses and stiff competition in Germany’s crowded banking market.
Peter Nerby, who analyzes Deutsche for credit rating agency Moody’s, pointed to tough competition among numerous international banks, asking “whether there’s enough food for everyone.”
That view was echoed elsewhere. Hendrik Leber, a fund manager with Acatis, said Deutsche should focus on German companies overseas: “Without the investment bank, Deutsche Bank would be much more reliable and profitable.”
JPMorgan analysts said in a research note that Deutsche Bank should shrink its US investment banking business to create shareholder value.
Schenck, the investment bank co-head, had wanted to expand it, but Achleitner, in an interview with the the Frankfurter Allgemeine Zeitung on Monday said: “The bank didn’t currently support that effort.”
Sewing has hinted he is open to a smaller investment bank in his staff memo on Monday, saying “we’ll have to further adapt our revenue, cost and capital structure.”
Some in Germany would welcome a return to Deutche Bank’s roots — it was founded during the Industrial Revolution to finance German firms’ expansion overseas.
“He has a huge task ahead of him that has big significance for Germany and our export orientated industry,” Carsten Schneider, a prominent lawmaker from Germany’s governing Social Democrats, told Reuters.


A Jordan startup delivers eco-friendly alternative to dry cleaning

Updated 05 December 2019

A Jordan startup delivers eco-friendly alternative to dry cleaning

  • Products used by WashyWash are non-carcinogenic and environmentally neutral
  • Amman-based laundry service aims to relocate to a larger facility in mid-2020

AMMAN: A persistent sinus problem prompted a Jordanian entrepreneur to launch an eco-friendly dry-cleaning service that could help end the widespread use of a dangerous chemical.

“Dry cleaning” is somewhat of a misnomer because it is not really dry. It is true that no water is involved in the process, but the main cleaning agent is perchloroethylene (PERC), a chemical that experts consider likely to cause cancer, as well as brain and nervous system damage.

Kamel Almani, 33, knew little of these dangers when he began suffering from sinus irritation while working as regional sales director at Eon Aligner, a medical equipment startup he co-founded.

The problem would disappear when he went on vacation, so he assumed it was stress related.

However, when Mazen Darwish, a chemical engineer, revealed he wanted to start an eco-laundry and warned about toxic chemicals used in conventional dry cleaning, Almani had an epiphany.

“He began to tell me how PERC affects the respiratory system, and I suddenly realized that it was the suits I wore for work — and which I would get dry cleaned — that were the cause of my sinus problems,” said Almani, co-founder of Amman-based WashyWash.

“That was the eureka moment. We immediately wanted to launch the business.”

WashyWash began operations in early 2018 with five staff, including the three co-founders: Almani, Darwish and Kayed Qunibi. The business now has 19 employees and became cash flow-positive in July this year.

“We’re very happy to achieve that in under two years,” Almani said.

The service uses EcoClean products that are certified as toxin-free, are biodegradable and cause no air, water or soil pollution.

Customers place orders through an app built in-house by the company’s technology team.

WashyWash collects customers’ dirty clothes, and cleans, irons and returns them. Services range from the standard wash-and-fold to specialized dry cleaning for garments and cleaning of carpets, curtains, duvets and leather goods.

“For wet cleaning, we use environmentally friendly detergents that are biodegradable, so the wastewater doesn’t contain any toxic chemicals,” Almani said.

For dry cleaning, WashyWash uses a modified hydrocarbon manufactured by Germany’s Seitz, whose product is non-carcinogenic and environmentally neutral.

A specialized company collects the waste and disposes of it safely.

The company has big ambitions, planning to expand its domestic operations and go international. Its Amman site can process about 1,000 items daily, but WashyWash will relocate to larger premises in mid-2020, which should treble its capacity.

“We’ve built a front-end app, a back-end system and a driver app along with a full facility management system. We plan to franchise that and have received interest from many countries,” Almani said.

“People visiting Amman used our service, loved it, and wanted an opportunity to launch in their countries.”

WashyWash has received financial backing from angel investors and is targeting major European cities initially.

“An eco-friendly, on-demand dry-cleaning app isn’t available worldwide, so good markets might be London, Paris or Frankfurt,” Almani said.

 

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and global development, to explore the possibility of changing the status of the Arab region. The initiative offers the press a series of articles on issues affecting Arab societies.