Deutsche Börse's straight-talking boss

CEO Theodor Weimer has improved Deutsche Börse’s relations with politicians and investors, but can he make the acquisitions that will take the company into the big league?
Quelle: dpa
Weimer doling out tough love.

Theodor Weimer is no diplomat. Since becoming Deutsche Börse CEO a year ago, the 59-year-old manager has become known for spontaneous straight talk and caustic turns of phrase. For some in the company, owner of the Frankfurt Stock Exchange and other European markets, he is a breath of fresh air. Others have felt bruised and confused.   

Some attribute his trademark blunt style to a background in investment banking. Announcing 350 management job losses last year, he didn’t mince words: “We’re getting rid of managers who don’t add value for us.” Not a tone people are accustomed to at Deutsche Börse. 

Speaking to Handelsblatt, Weimer said his staff know where they stand, and know they can rely on him. “I have consciously tried to shake up the team, speaking frankly and setting targets. I feel I’ve convinced people, and brought them along with me.”

Grafik

When he took over a year ago, Deutsche Börse was reeling from a succession of blows. Accusations of insider trading against former CEO Carsten Kengeter had hobbled the company for an entire year.

Finding its soul again

And, after a long struggle, the company had failed – for the third time – to merge with the London Stock Exchange. The proposed deal would have seen Deutsche Börse headquarters moved to London. This was unpopular with many staff, regulators and politicians, who felt the company was losing its soul.

One of Weimer’s main tasks has been to repair damaged relationships with regional politicians and regulators, who can exert real influence on what the company can do. He made a good start, announcing that no deals would be made which would move the company from Germany. Moreover, the derivatives business is relocating from London to Frankfurt.

To many, it felt that the company was affirming its roots in Germany, Frankfurt and the central German state of Hesse. It helped that Weimer lived locally, unlike his predecessor. Regional Christian Democrat leader Michael Boddenberg says the CEO is a breath of fresh air, with a bluntness that feels more authentic than smooth speeches.

Investors are pleased too, helped by a 10 percent stock price rise in 2018. Weimer has refreshed the executive team, bringing younger blood into a company sometimes seen as overly passive. But strategy hasn’t changed much, based on organic growth, careful acquisitions and new technology.

Reaching the big leagues

The new CEO has delivered good numbers, with revenues up 11 percent to €2 billion ($2.3 billion) in the first nine months of 2018 and net profits rising 16 percent to €772 million. But much of that growth has been the result of increased market volatility. Analysts wonder if the performance can be repeated in quieter years.

So acquisitions will play a crucial role. So far, Weimer has only made a couple of minor takeovers, not enough to bounce the company into the global big league, dominated by US giants CME and ICE.

Weimer acknowledges the need for big deals. But potential targets seem prohibitively expensive. Even relatively modest acquisitions like forex trading platform FXAll or bond platform Tradeweb would go for around $3 billion each, although Deutsche Börse should have little problem raising the necessary capital.

But the CEO continues to talk a big takeover game, holding out the prospect of substantial acquisitions. He has two years to deliver: His contract runs out at the end of 2020.  

Andreas Kröner joined Handelsblatt in August 2017 and is a financial correspondent based in Frankfurt. Brían Hanrahan adapted this article into English for Handelsblatt Today. To contact the author: [email protected]