Add "scathing critique from a top-ranking executive" to the list of woes plaguing Germany’s largest lender.
At a recent managerial conference, Kim Hammonds, Deutsche Bank’s chief operating officer and the woman responsible for streamlining the company’s IT systems, said the bank was the “most dysfunctional” place she’s ever worked, according to a report in the German newspaper Frankfurter Allgemeine Zeitung.
Ms. Hammonds, whose career has included stints at Boeing, Dell and Ford, told Handelsblatt that the comments referred to an “internal, confidential managerial conference” and she would maintain that confidentiality – though she did not deny saying it. Noting the other multinational corporations on her résumé, she added that “the situation at Deutsche Bank is vastly more complex, which isn't really surprising. We're a global bank in a difficult transformation."
Compared to other European banks, which started that digital transformation earlier, Deutsche Bank still has some catching up to do, she said.
Even CEO John Cryan admitted they were “lousy” back in 2015.
Deutsche’s IT systems have long been under fire. Even CEO John Cryan, himself known as a rather straight-talker, admitted they were “lousy” back in 2015. The Federal Reserve in the United States has repeatedly fined the bank for lax controls in part related to its IT problems.
Ms. Hammonds insisted they’ve made considerable progress reforming computer systems, which have been criticized as cumbersome and convoluted. When she began her work in 2015, the bank had 45 different operating systems. That’s been cut to 32. She insisted the bank was on target and had cut operating costs around 9 percent last year, though she admitted things could move even faster.
Ms. Hammonds’ comments may have been off the cuff, but the fact that they came from a high-ranking executive—in the presence of other top-ranking executives—is telling of the dire straits in which Deutsche Bank finds itself.
Just last Friday, the company’s stock price fell 5 percent to its lowest level in 18 months. Investors are worried about the lender’s business model as it struggles to rediscover its profitability while boxing through tough restructuring measures. The stock price slump came on the same day that Deutsche’s asset-management subsidiary, DWS, had its much-hyped IPO. The flotation was successful, earning the company a handsome €1.4 billion, but the 5-percent drop of its parent company’s stock was a bit of a wet blanket.
The rather dour situation has led some shareholders to question the future of Mr. Cryan as well as Ms. Hammonds, whose contract runs out at the end of the year. One employee even reportedly challenged her to resign after the latest comments. She shrugged off the suggestion, telling Handelsblatt she’s simply doing her best.
But it certainly doesn’t help Deutsche Bank's appearance that the lender seems to keep stumbling from one controversy to the next, whether it’s an outcry over performance-based bonuses — or an uninhibited executive.
Daniel Schäfer is head of Handelsblatt's finance section and Michael Maisch is the section's deputy editor. Chris Cottrell and Christopher Cermak of Handelsblatt Global contributed and adapted this story into English. To contact the authors: [email protected], [email protected] and [email protected]