Compliance and regulatory matters may not be the sexiest area of finance, but when it comes to Deutsche Bank’s new management structure, they’re a central and overlooked component.
Anyone with a sniff of any scandal that has affected the bank, or had a brush with the regulator – no matter how indirectly – has been ejected. Meanwhile, at the end of the very long statement from the bank on its new appointments, one has been relatively overlooked – Sylvie Matherat, the new chief regulatory officer, supported by Nadine Faruque the global head of compliance.
Matherat isn’t just there to mitigate against reputational damage. Litigation expenses have been huge at Deutsche Bank – in the first quarter of 2015 alone, it was forced to shell out $2.5bn in fines related to its role in Libor fixing, and paid $7.5bn in litigation costs over the previous two years. Keeping a lid on this will be key to future profitability and anyone stepping out of line can expect the consequences to be severe.
A law graduate from Sciences Po in Paris, Matheret is married with three children and spent seven years as director of financial stability at France’s central bank. There, she was also a member of an advisory group on the financial crisis, an advisory committee to maintain IASB standard, a supervisory committee at the ECB and an Accounting Task Force. She only joined Deutsche last year, so a message of clearing the decks couldn’t be clearer.
Like most big banks, Deutsche has been bolstering the ranks of its compliance teams, giving both women larger divisions to oversee while other departments cut back. It added 500 compliance staff in the U.S alone last year, and so far this year has continued to add middle office staff while cutting back elsewhere.
Faruque also joined Deutsche Bank in December last year after six years at Unicredit in Italy, where she was group compliance officer. She previously worked at Merrill Lynch in London, where she was European counsel.
Matherat is a gifted and connected lobbyist with connections in all the right places across Europe. Not only will she hold clout externally, but she is likely to shake up the internal processes at Deutsche Bank in a more systematic manner than simply giving a stern video lecture on 'vulgar' behaviour to traders – as outgoing co-chief of its investment bank Colin Fan did last year.
It also helps score diversity brownie points. Deutsche Bank has made no secret of getting more senior women into the organisation, but at last count they accounted for just 18.7% of managing directors. Yes, both Matherat and Faruque work in middle office roles – traditionally an area where women thrive in the financial sector – but their new-found influence will give them added prominence at Deutsche.