|Delayed - 07/14 09:58:02 am|
Meet the CFO-Banker Who May Be Next to Run Deutsche Bank
|03/22/2017 | 01:02pm|
By Jenny Strasburg
It was mid-2016, and Deutsche Bank AG was having a terrible summer. The stock was down to several-decade lows, analysts were braying for a capital hike and the Justice Department was threatening a massive fine.
Meantime, German utility RWE AG was working on a $5 billion spinoff of a subsidiary in what would be Europe's biggest equity offering of the year. RWE wanted a particular Deutsche Bank banker on the deal, one who'd worked at another German utility: Marcus Schenck, the Deutsche Bank chief financial officer.
Despite the turmoil at the office, Mr. Schenck shepherded the RWE deal and others, telling clients to think of him as their senior point of contact, people close to the process said. Some people inside and outside the bank raised eyebrows that the 51-year-old CFO was spending so much time away from the books.
But a penchant for deal-making has landed Mr. Schenck the promotion of his life: This month, he was named deputy CEO alongside another German, Christian Sewing, a 46-year old who oversees retail and private banking and has been at Deutsche Bank since he was a teenage trainee.
Messrs. Schenck and Sewing are widely seen as potential successors to Chief Executive John Cryan, who is 56.
Of the two deputies, Mr. Schenck has the more global and higher-profile stage. As soon as a new CFO is named -- likely in the next month or two, people close to the bank say -- he'll move over to the investment bank, which despite market-share declines remains a global force.
There, Mr. Schenck will replace Jeffrey Urwin, who is retiring after less than two years on the job. Mr. Schenck is taking on an expanded role, as Deutsche Bank reunites its far-flung trading business with its corporate and investment banking business, which it had split off in late 2015.
The recombined investment bank will be the biggest by far of Deutsche Bank's three business divisions, measured by revenue and risk-bearing assets. Mr. Schenck will co-head the recombined investment bank with markets chief Garth Ritchie; of the two, only Mr. Schenck has the deputy CEO title.
People who know Mr. Schenck say they think he is taking on his toughest job yet. He needs to honor promises he has made as CFO to continue hacking away at costs yet make the investment bank's business grow. Financial turmoil and paltry bonuses have cost Deutsche Bank a number of senior bankers as well as market share, including in Germany, where it wants to regain ground.
Mr. Schenck met with investors around Europe this month, according to a person familiar with the matter. Shareholders hammered him with questions about cost-cutting targets. Many said they'd been burned before by Deutsche Bank's failure to deliver.
He told them the management team has two years to prove this time is different. He plans to hire more bankers to improve coverage of sectors where departures have hurt the bank, such as chemicals and health care, according to a person familiar with his thinking.
He, like other executives, wants Deutsche Bank to regain the trust of corporate clients, especially in Germany, and to become less reliant on volatile trading by clients like hedge funds.
Mr. Schenck was born in Bavaria, an only child whose father was a German Air Force pilot who flew F-104 Starfighters and whose mother was a sometime shopkeeper. As a child, he moved around Germany with his parents and played soccer, as his own school-age children do now. Mr. Schenck tries to leave Deutsche Bank's headquarters in Frankfurt, or wherever else he is working, and arrive home to Düsseldorf Friday nights to spend weekends with his family.
He met his Dutch wife, Saskia, when he was a young banker at Goldman Sachs International Inc. and she worked at DaimlerChrysler AG, a client.
During his first stint at Goldman Sachs, from 1997 to 2006, he was a classic German merger-and-acquisitions banker, helping to advise Britain's Vodafone AirTouch PLC on its $180 billion takeover of Germany's Mannesmann AG. He became known for kicking off his shoes and pacing in his socks during late-night deal sessions at the office.
Named a Goldman partner in 2002 at age 36, Mr. Schenck two years later became investment-bank co-head for Germany and Austria. He left Goldman in 2006 to be CFO at E.ON AG, a client, overseeing asset sales and expansion plans. In 2013, he returned to Goldman as a London-based senior banker.
"Marcus has CEO potential," said Alex Dibelius, who ran Goldman Sachs's German operations for years and now is managing partner at buyout firm CVC Capital Partners.
Another Goldman Sachs alumnus, Deutsche Bank Chairman Paul Achleitner, recruited Mr. Schenck in 2014 to Deutsche Bank, convincing him it was worth a pay cut, according to people familiar with the matter. He was named CFO effective May 2015. The next month, Anshu Jain resigned as co-CEO , and Mr. Cryan took over. The restructuring has continued since, with occasional bouts of deep investor concern over Deutsche Bank's capital position.
At one point early last year, Mr. Achleitner asked Mr. Schenck if he would consider taking over the investment bank, according to people familiar with the matter. At the time, officials weren't sure Mr. Urwin, based in New York, was going to work out in the role, the people said. Deutsche Bank declined to comment on Mr. Urwin's behalf beyond an earlier statement that he plans to retire.
Mr. Schenck didn't think Mr. Urwin's job was better than being CFO, at least not the way it was structured, a person familiar with his thinking said.
Late last year, the management-change talks resurfaced, according to people familiar with discussions at the time. On Feb. 7, The Wall Street Journal reported that Mr. Schenck was in talks to take over Mr. Urwin's job and that Mr. Urwin was discussing retirement.
Among Mr. Schenck's tasks will be to rebuild morale at the investment bank, at headquarters and in the big New York and London operations.
In February, Mr. Schenck called bankers in New York, some of whom hadn't known of the changes, and told them he plans to be in the U.S. monthly, addressing some concerns about long-distance management, one of the people said.