Legal Business

Deutsche Bank appoints new global head of regulatory affairs

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In-house Deutsche Bank
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Following the departure of Deutsche Bank’s compliance and regulatory affairs chief Andrew Procter to Herbert Smith Freehills (HSF) in March, the investment bank has hired Banque de France’s Sylvie Matherat as its new global head of regulatory affairs, taking over some of Procter’s former responsibilities.

Matherat, who was the French central bank’s deputy director general of operations and director for financial stability, is set to start her position on 1 August and will lead an expanded government and regulatory affairs function with responsibility for regulatory adherence and implementation, relationship management, and advocacy. The bank has yet to confirm who will become its new head of compliance.

An internal memo seen by Legal Business states that strengthening the bank’s compliance function is an ‘integral’ part of its ‘Strategy 2015’ and one where it will continue to make significant investments.

Daniela Weber-Rey, the bank’s current chief governance officer and deputy global head of compliance, who was hired from Clifford Chance last April, was asked to work closely with Procter to ensure a smooth transition for his departure, according to the memo.

Matherat will become a member of the group executive committee, which performs advisory, coordinating, performance-monitoring and decision-preparing functions for the management board.

Having joined Banque de France in 1986 and held various senior roles, she will now be based in Frankfurt and report to management board member Stephan Leithner, whose functional responsibilities include government and regulatory affairs.

Co-chief executive officers of Deutsche Bank, Jürgen Fitschen and Anshu Jain, said in a joint statement: ‘Sylvie’s appointment underscores our commitment to further improve our control environment and engagement with regulators globally.’

Other significant appointments in the sector include IMI’s hire of Jo Morgan as chief compliance counsel in April. Her move came nine months after BAE System’s compliance and regulation chief counsel Mark Serfozo joined Rolls Royce as director of risk after nearly 20 years with the defence, security and aerospace giant. It further emerged last August that Berwin Leighton Paisner financial services partner Nick Kynoch had joined Barclays Investment Bank as the head of regulatory compliance for Europe, the Middle East and Africa (EMEA).

Sarah.downey@legalease.co.uk

Legal Business

Morgan Stanley and Deutsche Bank blame litigation for drop in Q4 profits

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Financial results 2013 Deutsche BankMorgan Stanley
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Financial institutions report multibillion-dollar effects of post-crisis costs

Morgan Stanley and Deutsche Bank have become the latest major financial institutions to declare that their earnings have been hit hard by litigation costs with Morgan Stanley in January reporting a fourth quarter 78% drop in net income to $192m, compared to $890m in its third quarter, due to legal costs and weak fixed income trading.

Revenue for the period rose from $7bn to $7.8bn since last year but pre-tax legal costs of $1.2bn meant that earnings for the quarter were almost wiped out, the FT reported in January.

Legal Business

Deutsche Bank pinpoints litigation costs for wiping out its fourth quarter profits

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Litigation Deutsche Bank
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Frankfurt-headquartered Deutsche Bank yesterday (19 January) partially blamed its full-year litigation expenses of €2.5bn for a fourth quarter pre-tax loss of €1.2bn, shortly after Morgan Stanley blamed legal costs of $1.2bn for its drop in net income during the same period.

Deutsche Bank’s litigation fees amounted to €528m for the fourth quarter.

The bank – Germany’s largest lender – in December agreed to settle its mortgage-backed securities litigation with the Federal Housing Finance Agency (FHFA) as conservator for Fannie Mae and Freddie Mac, with a pay-out of €1.4bn. Deutsche Bank was one of 17 financial institutions the FHFA made claims against in relation to residential mortgage-backed securities.

The announcement comes after last Friday (17 January) saw Morgan Stanley announce a fourth quarter 78% drop in net income to $192m due to legal costs and weak fixed income trading.

Revenue for the period rose from $7bn to $7.8bn but legal costs of $1.2bn meant that earnings for the quarter were almost wiped out, the FT reported on Friday (17 January).

In its report the US investment bank declared that ‘the current quarter includes $1.2 billion of additions to legal reserves for mortgage-related matters, specifically litigation and investigations related to residential mortgage-backed securities and the credit crisis.’

Investment banks have been boosting their internal litigation functions in response to growing regulatory oversight and Taylor Wessing’s head of financial disputes, Shane Gleghorn, told Legal Business: ‘The internal teams will continue to be beefed up and it’s also good news for regulatory consultants – those who make their living on advising banks on how to structure their system controls; banks will allocate more resources to that.

‘The biggest decision making process is going to be, certainly for significant banks, how they allocate and divide it between internal and external legal spend.’

sarah.downey@legalease.co.uk

Legal Business

Deutsche Bank profits dive amid €1.2bn legal provision as pressure builds on finance leaders

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Finance Deutsche Bank
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If anyone still doubts the mounting legal burdens now falling on the world’s largest finance houses Deutsche Bank has this week dispelled such thoughts after announcing a fresh €1.2bn provision to cover its legal costs.

The German banking giant today (29 October) reported a 98% fall in quarterly profits after setting aside additional funds to cover its liabilities, reflecting the mounting regulatory burden facing the financial institution. The bank’s group income before taxes dropped for the third quarter to €18m, against last year’s figure of €747m for the same period in 2012.

The bank’s litigation reserves now stand at €4.1bn, while general and administrative expenses increased by €872m due to higher litigation related expenses. Deutsche regularly instructs the entire Magic Circle as well as Latham & Watkins.

Co-chairmen of Deutsche’s management board, Jürgen Fitschen and Anshu Jain, said: ‘In the third quarter we met several challenges. We took substantial litigation charges and saw reduced profits in investment banking, leading to a lower quarterly result.’

The news follows JP Morgan this month announcing a sharp fall in its profits for the third quarter after allocating $9.2bn to cover legal costs. In 2012, Deutsche Bank was alleged to have involvement in manipulation of Libor, the benchmark for inter-bank interest rates, but it has yet to reach a settlement with regulators.

Separately, Dutch bank Rabobank has agreed to pay the US, UK and Dutch regulators €774m in fines in settlement of allegations regarding Libor manipulation by some of the bank’s staff. Its chairman, Piet Moerland, also announced his resignation shortly after the agreement. He said: ‘The public has to be able to trust that Rabobank employees operate with our core values in mind. That is why I have today decided that, as a matter of principle, it is appropriate for me to resign as chairman of the executive board with immediate effect.’ Advisers to Rabobank include Linklaters, Allen & Overy and Herbert Smith Freehills.

Major financial institutions have been forced to spend huge sums in recent years on dealing with regulatory, compliance and litigation cost in the wake of the banking crisis, with other institutions targeted including HSBC, Standard Chartered and Barclays.

jaishree.kalia@legalease.co.uk

Click here for a focus on the regulatory pressure facing in-house teams at banks

Legal Business

Clifford Chance partner takes up governance role at Deutsche Bank

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Leadership Clifford ChanceDeutsche Bank
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Deutsche Bank today (17 April) announced the appointment of Clifford Chance partner Daniela Weber-Rey as chief governance officer and deputy global head compliance in its Frankfurt office.

Weber-Rey, who is a long-serving corporate partner at Clifford Chance, will join Europe’s biggest bank by assets in June, overseeing corporate governance globally and acting as adviser to the management board on the governance structures and processes of the bank.

She will report to Deutsche Bank management board and group executive committee member Stephan Leithner in her governance role and serve as deputy to compliance chief Andrew Procter.

Weber-Rey has been a partner at Clifford Chance and legacy firm Pünder Volhard Weber & Axster for over 20 years. She was also a member of the Magic Circle firm’s partnership council until earlier this year and continues to be a member of the Commission of the German Corporate Governance Code. She regularly advises German and multinational corporates and banks on corporate governance and general boardroom issues.

According to a statement from Deutsche, Weber-Rey’s hire forms an ‘important component’ of the bank’s cultural change initiative in ensuring good decision-making and clear accountabilities across the bank.

Leithner said: ‘We are pleased that Daniela Weber-Rey will be joining Deutsche Bank. Staying at the forefront on governance structures and processes, an area where the bank is traditionally strong, will be critical in the context of significant market and regulatory change.’

Weber-Rey becomes the second partner from a Magic Circle firm in Germany to announce a role in a financial institution this week. Former Freshfields Bruckhaus Deringer senior partner Konstantin Mettenheimer is set to join asset manager Edmond de Rothschild Group this summer as chairman for the Franco-Swiss bank’s businesses in Germany, including its asset management, private banking and advisory services. He will be based in Frankfurt.

francesca.fanshawe@legalease.co.uk

Legal Business

Emma Slatter – Deutsche Bank

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In-house Deutsche Bank
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Emma Slatter

General counsel for UK and western Europe

Deutsche Bank

 

Although Emma Slatter was only appointed GC for UK and Western Europe in May 2010, one banking partner describes her as spearheading a ‘leading in-house team that is at the forefront of innovative transactional support, regulatory-driven initiatives and external counsel management’.