Frankfurt Setback for Commerzbank: Due to concerns of the financial supervisory authority, the institute cannot make Rüdiger Rass the new risk director as planned. Instead, the new chairman of the supervisory board, Jens Weidmann, has to look for an alternative.

Rass decided “after discussions with the banking supervisory authority in agreement with the board of directors and the supervisory board” to no longer be available for the position of risk director, Commerzbank said on Tuesday after an extraordinary supervisory board meeting. Instead, Rass will continue in his current position as Chief Credit Risk Officer.

“We respect Rüdiger Rass’ decision and are pleased that he is still available to the bank,” said Weidmann. “We will start the new search process for the successor to the Chief Risk Officer immediately and drive it forward with the appropriate thoroughness.”

Incumbent Marcus Chromik does not want to extend his contract, which expires at the end of the year. The Commerzbank supervisory board originally wanted to decide at the end of last year that Rass would succeed Chromik at the beginning of 2024. However, the review process by the financial regulator took longer than the bank expected.

The financial regulator screens directors as part of a so-called “Fit and Proper” test and must approve them before they start their job. According to insiders, the financial supervisory authority asked Rass, among other things, what role he played in lending to Wirecard.

Financial regulator checks Wirecard loans

Commerzbank had a long-standing lending relationship with the payment service provider, which after the disclosure of non-existent assets on the balance sheet in the summer of 2020

went broke. As a result, Commerzbank had to write off 187 million euros on its Wirecard loans.

The supervisory board of Germany’s second largest private bank has had Wirecard’s credit exposure examined internally and externally. He came to the conclusion that there had been no misconduct on the part of the Management Board. Rather, the institute had become a victim of a major fraud case.

Rass personally is also not to blame, explained CFO Bettina Orlopp at the general meeting at the end of May. “Mr. Rass was not involved in the decision to grant a loan to Wirecard.”

The reason why the ECB rejected Rass was not the Wirecard loan, several people familiar with the topic told the Handelsblatt. Rather, the financial supervisory authority had fundamental doubts as to whether Rass was the right person to lead such an important board department.

After the ECB informed Weidmann of these doubts, the institute withdrew Rass’ nomination – and thus avoided a formal veto by the financial regulator. The ECB declined to comment on the issue.

The fact that the financial supervisory authority is looking particularly closely at the review of the new Commerzbank risk management board may also have something to do with the fact that CEO Manfred Knof has spent most of his career in the insurance industry and does not have as much credit experience as other bank bosses, several said topic familiar people. It is therefore all the more important that Commerzbank once again gets an experienced and assertive risk manager after Chromik.

HR consultant expressed concerns early on

Commerzbank had already commissioned the HR consultant Nicola Sievers in 2022 to find a successor for Chromik, as several insiders told the Handelsblatt. In addition to Rass, Sievers presented several external candidates. In addition, she had expressed concerns as to whether Rass could be appointed.

According to financial circles, however, the board of directors spoke out in favor of race as part of the process. In addition, an external personnel consultant also gave a recommendation for Rass. The Supervisory Board then decided at the end of 2022 to nominate Rass.

Rass enjoys a good reputation within Commerzbank. “There is no one who knows the risks in the German market better – and these are the relevant risks for Commerzbank,” says a companion. Others emphasize that loan defaults have mostly been lower than originally expected in recent years.

Until recently, there was great hope within Commerzbank that the ECB would ultimately agree to Rass’ appointment. “I am convinced that Mr. Rass, with his many years of professional experience, would be an excellent risk director,” said Helmut Gottschalk, who has since left the supervisory board, at the beginning of April. “The bank is very well positioned in risk management.”

Since the bank has recently filled three board positions with external candidates, from Gottschalk’s point of view, an appointment by Rass would also have been an important sign to internal managers “that with good work you can make it onto the board at Commerzbank”. However, nothing will come of this for now.

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