Cantor Fitzgerald Anshu Jain's Second Chance

The former co-CEO of Deutsche Bank is joining Cantor Fitzgerald, a small U.S. investment bank and brokerage. Choosing a new role out of the limelight is a common career path for former top bankers.
Eighteen months after being knocked out as co-CEO of Deutsche Bank, Anshu Jain is taking over as president of the finance firm Cantor Fitzgerald in Manhattan.

His second career could have begun in his home country, India. “If there are ways I can help the country, I'll always choose to do so,” Anshu Jain, the former co-chief executive of Deutsche Bank with Jürgen Fitschen, told a conference in London in 2015, triggering speculation that his future lay in the Indian banking sector or politics.

One person familiar with the matter said he might join Japanese telecommunications and media group Softbank. No, said other sources, he’ll remain faithful to finance but will switch to asset management.

One-and-a-half years after Mr. Jain left Deutsche Bank under a cloud, he’s ended the speculation by opting for a second career at private Wall Street firm Cantor Fitzgerald.

The investment boutique and brokerage said in a statement on Monday that it had appointed Mr. Jain as its president to work alongside Chief Executive Howard Lutnick. He will work from London and assist Cantor Fitzgerald in its planned expansion of equity and bond trading. The firm wants to expand in Asia in particular.

I know that he’s an ethically flawless person and that he’s sad about how things ended at Deutsche Bank. Howard Lutnick, Cantor Fitzgerald CEO

“We’ve been friends for a long time,” Mr. Lutnick told Handelsblatt in an interview. “I know his family. I know that he’s an ethically flawless person and that he’s sad about how things ended at Deutsche Bank. But now he’s returning to his roots, to the business on behalf of clients, and he’s got tremendous experience there, especially in the bond market. And our firm doesn’t enter into any big risks there, we primarily offer a service.”

Asked whether he planned to gain new customers with Mr. Jain’s help given that Deutsche Bank was currently shedding some clients it viewed as unprofitable, Mr. Lutnick said: “We don’t compete with banks, we tend to work on their side. But banks today are forced to underlie their business with fat capital cushions. So some client links no longer pay off for them. That’s our chance.”

Mr. Lutnick said Cantor Fitzgerald planned to expand prime brokerage, a service offered to hedge funds, for example.

The firm, which lost around two thirds of its almost 1,000 staff in New York in the 9/11 attacks on the World Trade Center, has since expanded its global workforce from 2,400 to more than 10,000.

People close to Mr. Jain said he was remaining faithful to what he’s best at and what he had enjoyed most in his career: trading. It simply took a while before he could find a suitable position that would put him back on the front line of trading, the people said.

Critics said his focus on markets is where he went wrong at Deutsche Bank. In his three years at the co-head of Germany’s largest bank between 2012 and mid-2015, he failed to control costs and sharply expanded its trading business at the expense of profits, a legacy the bank is still struggling with.

Mr. Jain, who headed Deutsche Bank’s investment banking operations before he became co-CEO, was among executives singled out for criticism by Germany’s financial regulator in 2015 for failing to act swiftly enough to halt the manipulation of interest-rate benchmarks by its traders.

In 2015 the bank was handed a record $2.5 billion fine by U.S. and U.K. regulators to end a five-year probe into its manipulation of the London-based Libor and Brussels-based Euribor interbank interest-rate benchmarks. That was just one of the legal cases it faces from its high-rolling days in the run-up to the 2008 financial crisis and after.

In joining Cantor Fitzgerald, Mr. Jain has taken a similar path to other top bankers who stayed in finance but opted for a life out of the spotlight, and with more freedom. They started their own business or joined smaller firms that were less subject to regulatory restrictions of a large, listed financial company.

Bob Diamond, the former head of Britain’s Barclays, invests in the African banking sector with his holding company Atlas Mara. Brady Dougan, who quit as head of Credit Suisse in 2015, wants to set up his own trading bank and has already raised $3 billion to fund the project, said financial sources.

Antony Jenkins, who succeeded Bob Diamond at the helm of Barclays but had to step down in mid-2015, launched a start-up aimed at helping established banks to fend off new competitors: 10x Future Technologies.

Vikram Pandit, the former chief of Citigroup, and John Mack, the former CEO of Morgan Stanley, support small but rapidly expanding financial firms.

Mr. Jain won’t be running Cantor Fitzgerald, which isn’t a big league player. It’s a mid-sized, privately-owned bank. That means that unlike at Deutsche Bank, Mr. Jain won’t have to fear criticism from politicians and analysts each quarter.

He spent two decades at Deutsche Bank and was seen as the protégé of Edson Mitchell who turned the Frankfurt-based bank into a global player in investment banking. When Mr. Mitchell died in a plane crash in 2000, Mr. Jain succeeded him as head of Global Markets.

He expanded the derivatives business and became one of the best dealers in the market, boosting Deutsche Bank’s assets and earnings. The London trading operation he ran brought the bank glamor and the respect of its peers. Analysts described him as a trader “who has proved he can walk on water.”

That assessment changed with the financial crisis. Mr. Jain made it to the top of Deutsche Bank in the summer of 2012 as co-chief with Mr. Fitschen but he personified a corporate culture that saddled the bank with massive and costly problems. Mr. Jain stood for bumper bonuses and questionable, high-risk business deals.

Regulators exposed Deutsche Bank’s tricks as a failure of its management. Mr. Jain wasn’t declared the main culprit. But he had to leave in 2015 after heavy criticism from investors and analysts. Shareholders had lost faith in his ability to give Deutsche Bank the urgently needed fresh start, offload its legal risks and usher in a credible change of its culture. It’s now up to his British successor John Cryan to cut costs, upgrade its outdated technology, shed staff and adjust the bank’s business model to a new age of stricter regulation.

It was Mr. Jain’s readiness to take risks that sealed his fate at Deutsche Bank. “That could be advantageous in his new position and help Cantor Fitzgerald to expand,” said a financial source in London.

If he succeeds in making the U.S. bank bigger and more successful, it could improve his tarnished reputation, said one banker at a Deutsche Bank competitor who knows Mr. Jain.

15 years ago, Wall Street legend Warren Buffett predicted that Anshu Jain would one day run an investment bank. He was right. Now Mr. Jain is getting a second chance. Cantor Fitzgerald ranks well down the list of investment banks. With Mr. Jain as president, that could change.

 

Katharina Slodczyk is Handelsblatt’s London correspondent. Frank Wiebe is a New York correspondent for Handelsblatt. To contact the authors: [email protected][email protected]