Deutsche Bank discusses dual role of US board with ECB

Stephen Simon

The manager will also lead the business in the USA in the future.

(Photo: imago/Sven Simon)

Frankfurt The recent restructuring of the management board at Deutsche Bank raises questions for the banking supervisory authority of the European Central Bank (ECB). The dual role of board member Stefan Simon is causing discussions between the central bank and Deutsche Bank, the Handelsblatt learned from financial circles. On the institute’s board of directors, Simon is responsible, among other things, for compliance, i.e. for adhering to all of the bank’s rules and regulations. He has also been responsible for the US business since May.

It is about the question of whether there are conflicts of interest if Simon, as the compliance officer, is responsible for business himself, an insider reported. The talks between the bank and the supervisory authority should deal with questions of how Simon’s role as US boss is precisely defined and whether the dual function is intended to be permanent or temporary. However, it is unclear whether the status quo will change.

Deutsche Bank said it generally does not comment on its discussions with regulators. ECB supervision did not comment on this.

It was not without reason that the bank sent Simon, who, in addition to compliance, is also responsible for relations with the supervisory authorities, to the USA. The relationship with the American supervisory authorities has been tense for years.

Improvement is a high priority for the institute. Among other things, the US supervisors were frustrated that the Deutsche Bank managers responsible for the USA have so far had no direct influence on the improvements to the control systems.

Deutsche Bank distinguished between tasks

More recently, Deutsche Bank had differentiated between so-called “infrastructure” tasks such as finance, risk management or compliance on the one hand and tasks with business responsibility such as the private customer or corporate customer division on the other in the Management Board department. This separation applied in particular to control functions such as risk management, but also compliance.

Only the two regional heads of the institute, the former US head Christiana Riley and Asia head Alexander von zur Mühlen, have mixed responsibilities: They are responsible for business and cross-sectional tasks in their region, but are not in the front row. Instead, they always have to coordinate this with the board members who are primarily responsible, such as the head of corporate and investment banking, Fabrizio Campelli, or Stefan Simon, who is responsible for regulatory issues.

Logo Deutsche Bank on the New York Stock Exchange

A better relationship with the American regulatory authorities is a high priority for Deutsche Bank.

(Photo: dpa)

With the restructuring of the board of directors in April, the bank has softened this clear separation: Simon is primarily supposed to improve the bank’s difficult relationships with the American supervisory authorities and ensure a “first-class risk and control culture” in the USA, as the bank announced. According to the announcement of April 26, it should also “support the further expansion of business and relationships with customers and investors in this region”.

Simon is thus the first Deutsche Bank board member, at least in recent times, who, in addition to a control function on the board, also assumes more responsibility in the business area. CFO James von Moltke will also have business responsibility in the future because he has taken on board responsibility for the fund subsidiary DWS. However, he has not yet been a member of the supervisory board there – and unlike Stefan Simon, as CFO he does not exercise any control functions such as compliance or risk management.

More: Deutsche Bank is reorganizing its board of directors – US boss Riley is moving to Santander

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