Rising Departures

Brain Drain at Deutsche Bank

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Back to work, for today at least.
  • Why it matters

    Why it matters

    Besides its financial and legal worries, Deutsche Bank is now beginning to lose some talented employees who are finding better opportunities and more freedom in startups and other fields.

  • Facts

    Facts

    • Deutsche Bank plans to cut 9,000 jobs worldwide, including 4,000 in Germany, and close 200 branches in Germany.
    • CEO John Cryan has warned that the bank has another 18 to 24 months of restructuring before results improve.
    • As it eliminated jobs in retail and investment banking, Deutsche Bank added 1,500 employees in information techonogy.
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    Audio

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It’s almost a crazy idea, but let’s assume that Deutsche Bank were turning a profit, no longer had any legal disputes to resolve and had a strategy for digitizing its business – that’s the kind of world in which Lars Reiner might still consider working for the bank.

But the real world is a bitter place, and in that world Mr. Reiner is no longer with Deutsche Bank but the head of Ginmon, a Frankfurt startup. The young company, which opened its doors in May, offers its customers the ability to invest money online or via smartphone, a fully automated service that requires no branches or fund managers.

So far the company has only a few hundred customers and manages only a few million euros, but Mr. Reiner believes in the idea. “We see extreme growth. The concept is just taking off,” he says, noting that companies like Ginmon are hitting “the nerve of the day, hitting a nerve with customers.”

In fact, these so-called fintechs are electrifying the financial sector. The idea for a company like Ginmon first came to Mr. Reiner when he was working for Deutsche Bank’s in-house consulting division. But, as he says, “I discussed the idea with a few people and noticed that there was too much resistance.”

The bank was too busy with its own problems to delve more deeply into digitization.

In late 2014, Mr. Reiner gave notice, drummed up some partners and founded Ginmon. Today he is 28, happy not to be wearing a suit all the time anymore, and convinced that his company, with its 14 employees, has more going for it than Germany’s largest bank.

“We have no outdated systems, no large organization and no fear of cannibalizing other businesses,” he says.

“Many toy with the idea of leaving the bank and starting their own company”

Lars Reiner, former employee

Mr. Rainer isn’t the only former Deutsche Bank employee drawn to the world of fintechs.

“Many toy with the idea of leaving the bank and starting their own company,” he says. “It’s always more appealing to cope with growth than streamlining.” He was happy at the bank, Mr. Reiner adds, and yet: “Those who want to make their dreams come true are better off outside at the moment.”

These are critical months for Deutsche Bank. Last year’s record loss of €6.8 billion ($7.6 billion) shocked investors, and the share price has dropped so low that the media are already sensing the risk of a takeover of Deutsche Bank.

Germany’s largest bank plans to slash 9,000 jobs worldwide and close 200 branches in Germany. Bonuses will be 30 percent lower than the previous year and, according to the bank, will be eliminated altogether in some cases. The new chief executive, John Cryan, said the bank would face another 18 to 24 months of restructuring before things improved.

All of this weighs heavily on the mood among employees, and after a number of years of crisis, many are tired of sticking it out. What began as a trickle could turn into a mass exodus from Deutsche Bank.

Karin Ruck is someone who has seen first-hand, both in top management and in branches, how exhausting the years of crisis have been for employees. For 10 years, she represented employees on the Deutsche Bank supervisory board, in addition to her job as a coach for retail banking advisors.

“There was often a lack of continuity, and of a will to see changes through and wait to find out whether or not they would succeed,” she says. “I felt that there was a lack of consistency.” From the wrangling over investment management to the back-and-forth over the Postbank subsidiary, there was unrest at the bottom that went largely unnoticed by those at the top. “Nothing gets through to them,” Ms. Ruck said.

The bank was most welcoming to those who wanted to climb the corporate ladder and make a lot of money, but less so to creative types. “I didn’t suffer there, but I couldn’t work the way I wanted, either – more freely, independently and autonomously,” Ms. Ruck said.

In 2013, she left the bank where she had worked for almost 30 years. “At some point, it was no longer my bank,” she said.

“The top performers are the ones leaving now.”

Stephan Szukalski, Head of the DBV Bank Employees Union and a former member of Deutsche Bank's Supervisory Board

Ms. Ruck once oversaw chief executives Josef Ackermann and Anshu Jain, the bank’s former CEO and co-CEO, respectively. Now she works with 8- to 10-year-old children with learning disabilities and other problems. She began developing her Learning Studio business in Bad Soden, a community near Frankfurt, while still at Deutsche Bank.

“I like helping others,” Ms. Ruck said. “It’s very gratifying to me to see a student become more successful or lose his fear of school.”

Now, at 50, she lives according to her own schedule and says she feels healthier. Her voice sounded animated and her story like the story of someone who has found her inner compass. Her departure feels like a loss for the bank, as does that of Lars Reiner. And cases like theirs are becoming more and more common.

 

Deutsche Banks New Goals-01

 

“I know of many people who are already leaving today, often unnecessarily,” said Stephan Szukalski, head of the DBV bank employees’ union and a member of the Deutsche Bank supervisory board until recently. “The top performers are the ones leaving now,” he warns.

He blames the exodus on the insecurity that has taken hold among all employees in Germany.

“There has been talk of job cuts for months, but there is still nothing concrete coming from the bank. It’s horrible,” said Mr. Szukalski, referring to the labor negotiations over how the bank will eliminate 4,000 jobs in Germany. “The talks have been very superficial so far, dealing with procedural issues and severance packages. Which branches will be closed and who will have to go remains completely unclear.”

The bank is putting a positive spin on the crisis. Talks with employees are “going well,” outgoing co-Chief Executive Jürgen Fitschen said last week.

New Chief Executive John Cryan added that “the overwhelming majority” in the bank are “willing to tackle the changes.”

Mr. Cryan can see for himself that there is growing dissatisfaction within the bank, which he counters with praise.

 

Deutsche Bank s Ups and Downs-01

 

“Our employees are first-rate,” he says, and thanks them for their “untiring dedication.” Besides, Deutsche Bank points out that it is not just cutting old jobs but also creating new ones. For instance, the bank has already added 1,500 new employees in information technology, as well as a handful in investment banking.

To do so, Deutsche has resorted to poaching employees from American industry giants J.P. Morgan and Goldman Sachs.

 

118 Deutsche Bank-01 WTB 2014

 

Still, the bank is losing high achievers in investment management and investment banking. No one regrets the departure of some employees, because they are entangled in legal disputes. Others are considered a loss. Either way, former Deutsche Bank employees are increasingly going to the competition.

All of these departures have had an effect.

In the fourth quarter of 2015, profits in investment banking were 30 percent lower than in the previous year. While this is not solely attributable to personnel losses, it is to some extent.

The capital markets business, in particular, is often dependent on individual employees, so it makes sense for the bank to be giving up some of its activities and slashing bonuses. There is a cost involved when people leave who were bringing in revenue. A person familiar with the bank expects a new wave of departures in March, when bonuses are announced.

The case of Armin von Falkenhayn demonstrates what absurd consequences the ongoing crisis can have.

He was Josef Ackermann’s first assistant when Mr. Ackermann joined the bank in 1996. Today he is considered a doer with excellent connections in the industry, someone capable of landing major deals.

He was the head of investment banking within Germany for Deutsche Bank until 2014. Suddenly he had two new bosses. Mr. Falkenhayn left the bank and spent time picking grapes and volunteering at his children’s school. Then he was named Bank of America’s country representative for Germany.

As everyone knows today, it was a preventable loss. Of the two bosses whose arrival led to his departure, one has already left Deutsche Bank. The other is on his way out the door.

 

Arne Storn is an author who writes about banking, finance and other topics. This article originally appeared in Die Zeit newspaper. To contact the author: arne.storn@zeit.de.

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