New CEO

A Banker Leads the Bourse

Deutsche Boerse CEO Carsten Kengeter Source DPA 45305702
The new boss.
  • Why it matters

    Why it matters

    The new Deutsche Börse chief executive, Carsten Kengeter, needs to revitalize the stock market operator to keep up in competition with rival exchanges.

  • Facts

    Facts

    • Carsten Kengeter, 48, became Deutsche Börse’s chief executive on June 1.
    • Mr. Kengeter headed UBS’s investment bank operations until 2013 and worked at Goldman Sachs from 1997 to 2008.
    • He is known as a fighter and avid sportsman, running marathons and participating in skiing competitions.
  • Audio

    Audio

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Sometimes the things left unsaid are significant. When Carsten Kengeter, 48, recently presented himself as new chief executive to the shareholders of Deutsche Börse, the German stock market operator, he left out an important part of his resume. He spoke of his “work in the international capital markets” and said he knows Frankfurt well.

What he didn’t say was that he had a picture book career as an investment banker behind him, had bit his way through the London shark tank, rose to become the highest remunerated banker with Swiss bank UBS – until one day a trader under his watch upset his plans of advancement with crooked and costly deals.

Mr. Kengeter formally took charge of Deutsche Börse on Monday. The former head of UBS’s investment bank is supposed to make the stock market operator fit for the future.

Mr. Kengeter, a German national, must control a hybrid entity that operates like a modern IT corporation, but occasionally seems to be more like a bureaucratic German vehicle registration office.

All the while, foreign investors are breathing down his neck – not to mention the German government that often meddles in the exchange’s affairs.

Mr. Kengeter worked for years in Asia for Goldman Sachs and speaks Mandarin.

Deutsche Börse operations include the Frankfurt Stock Exchange, the German DAX blue-chip index, clearing and settlement house Clearstream, the European Energy Exchange, and futures and options exchange Eurex.

The group is “not just another company,” said Mr. Kengeter’s predecessor, Reto Francioni, whose expansion plans were dashed by the objections of anti-trust watchdogs.

After nearly ten years at the helm, the 59-year old man from Switzerland is leaving his successor a mixed balance sheet: solid numbers but no esprit.

Mr. Kengeter could change that. He is a fighter, runs mountain marathon and races in skiing competitions. He proved his perseverance at UBS, where he was in the running to be the successor to the chief executive officer at the time, Oswald Grübel.

Everything was running smoothly until September 2011, when his cell phone rang while he was on a business trip in New York. The news was that a dealer named Kweku Adoboli had speculated away $2.5 billion through unauthorized trading. It was clear to Mr. Kengeter that he was politically accountable.

He stayed at UBS until 2013. His presence and crisis management skills were a major factor in the bank managing to get through the scandal without taking too much of a beating. It wasn’t until UBS began to curb investment banking that he left the institution and became a guest lecturer at the London School of Economics, where he had once studied.

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Mr. Kengeter was able to spend more time with his family in his residence in Wimbledon, where he is a neighbor to Boris Becker. At work, the investment banker immersed himself in a subject close to his heart: The undesirable consequences of financial market regulation. It’s knowledge that will serve him well as head of the stock market, along with his own investments in small FinTech companies.

This feeds the hope of observers that he might conquer new business areas and finally give the Asian expansion the shine many have waited for so long. Mr. Kengeter worked for years in Asia for Goldman Sachs and has even learned Mandarin.

Mr. Kengeter plans to remain faithful to London for the time being. The father of three children will commute to Deutsche Börse’s headquarters in Eschborn, just outside of Germany’s financial capital Frankfurt.

It is there, in Deutsche Börse’s glass palace, that he has been spending most of his time since joining the executive board in April. His colleagues say he has spoken with as many employees as possible to gain a comprehensive picture of the stock market.

Like all politicians, Mr. Kengeter should be given a 100-day honeymoon period. The clock is ticking.

 

Michael Brächer is a financial editor in the investment team in Frankfurt. Daniel Schäfer is head of Handelsblatt’s finance pages and based in Frankfurt. To contact the authors: braecher@handelsblatt.com and dschaefer@handelsblatt.com

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