Theodor Weimer

New CEO to fix Deutsche Börse

Theodor Weimer Hypo-Vereinsbank
The last thing Deutsche Börse needs is another short-sighted boss. Source: DPA/Frank Leonhardt.

Speculation on the departure of Deutsche Börse’s embattled CEO dragged on for months this year until he finally threw in the towel in late October. But the German stock market operator has come up with a successor fairly quickly.

A frontrunner emerged just three weeks after Carsten Kengeter announced he would step down as chief executive at the end of the year. Deutsche Börse’s supervisory board quickly set its sights on Theodor Weimer, the current CEO of Munich-based HypoVereinsbank. Deutsche Börse confirmed the appointment in a statement on Thursday.

The 57-year old Bavarian is not an unknown entity in Frankfurt, where the stock exchange is headquartered. After stints at consulting firms McKinsey and Bain & Company, he also worked for Goldman Sachs in Frankfurt last decade. Mr. Weimer lives in nearby Wiesbaden, the state capital, and crucially, he is believed to be well-connected with regional politicians.

That’s a key criterion for Deutsche Börse supervisory board chairman Joachim Faber, who wants the future boss to have a better relationship with state government officials than Mr. Kengeter and his predecessor Reto Francioni. Both CEOs initiated large – and eventually doomed – mergers with the London Stock Exchange in which the legal domicile of the merged stock exchange would have been outside Germany. But most unforgivably, they did so without consulting the bourse supervisory authority, and this did not go down well with the oversight body, which is part of the Hesse state economics ministry.

In Germany’s largest financial center, many believe that Mr. Weimer stands a good chance of managing the balancing act between global ambitions and local realities more effectively than his predecessors did. “He knows the markets, but he also has the political tact,” a person who knows him well said, adding that he would be the right fit. He proved it when, back in 2005, Mr. Weimer was involved in an advisory capacity in the highly political takeover of the Frankfurt savings bank by the Frankfurt-based commercial bank Helaba, in which the state of Hesse holds a stake.

“Deutsche Börse would do well to appoint Theodor Weimer as its next CEO.”

Markus Riesselmann, analyst, Independent Research

Major investors are pleased with the breakthrough in Deutsche Börse’s quest for a new CEO. “We’re delighted that the succession debate will not drag on into next year as feared,” one large shareholder told Handelsblatt. “Deutsche Börse would do well to appoint Theodor Weimer as its next CEO,” said analyst Markus Riesselmann of Independent Research adding that as a banker, Mr. Weimer knows the bourse operator from the customer’s point of view. “The issue of succession should be addressed promptly,” he said.

Another major Deutsche Börse shareholder said it is important to restore calm to Germany’s largest stock exchange operator after a months-long insider-trading probe. “It will be a good thing if Mr. Weimer accepts the challenge,” he said, adding that it is not clear whether Mr. Faber will be able to stay at the helm of the supervisory board following the appointment of Mr. Weimer.

Together with Mr. Kengeter, the non-executive board chairman actively pursued the merger with the London Stock Exchange, which fell apart in the spring. As Deutsche Börse’s top governance overseer, Mr. Faber set up a compensation package for Mr. Kengeter, which later triggered an investigation of the now-disgraced CEO. As part of his compensation, Mr. Kengeter bought Deutsche Börse stock in December 2015, about two months before news broke of the talks with the LSE.

The public prosecutor’s office is accusing Mr. Kengeter of insider trading, based on its assumption that the manager was already negotiating the LSE deal at the time. Mr. Kengeter and Mr. Faber have denied any wrongdoing. But as suspicion kept mounting nonetheless, a beleaguered Mr. Kengeter announced in late October that he was stepping down to clear the way for a “new beginning.”

Hauptversammlung Deutsche Börse
One down, one more to go? Outgoing CEO Carsten Kengeter (left) with board chairman Joachim Faber. Source: DPA/Arne Dedert.

Mr. Weimar will already have a plan in place when he takes over. After Mr. Kengeter announced his resignation, the company said it would continue the “Accelerate” growth program it launched two years ago. The plan envisions a 10- to 15-percent increase in Deutsche Börse’s profit over the next two years. “Management is determined to implement the growth strategy that we have jointly developed,” said Deutsche Börse CFO Gregor Pottmeyer. He sees acquisition opportunities primarily in data, indices, currencies and commodities. According to the finance head, however, large-scale stock market mergers are no longer on the table. “We have learned that consolidation in the core stock-market business is somewhat difficult and lacks political support,” he said.

Whether Mr. Weimer shares this view remains to be seen. But at the very least, if he wants to try for another major deal like his predecessors, he’ll know better than to keep the Hesse state government in the dark.

Robert Landgraf is the deputy head of Handelsblatt’s finance section and is based in Frankfurt. Andreas Kröner covers finance for Handelsblatt out of Frankfurt. Michael Brächer is a financial editor in the investment team in Frankfurt. To contact the authors: landgraf@handelsblatt.com, kroener@handelsblatt.com, braecher@handelsblatt.com

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