For Deutsche Bank, Two Johns Could Be Better Than One

(Bloomberg Gadfly) -- Are two Johns better than one? Yes, according to Deutsche Bank AG. According to Bloomberg News, the firm is poised to add John Thain, famous for selling Merrill Lynch to Bank of America at the height of the financial crisis, to its supervisory board.

It's a pick that won't win any diversity awards given the firm's CEO is also an investment banker named John. Thain's pedigree tilts slightly too much to the pre-crisis era, too. His $1.2 million office redecoration bill didn't help him last long at Bank of America, and his record at CIT Group Inc. was mixed.

But any step towards a revamp of Deutsche Bank's supervisory board, however tentative, is surely welcome. The group has destroyed shareholder value over the course of several years: the lender's stock price is back near its low of 2016 -- even after the lender raised $9 billion of extra capital last year.

Thain would bring some investment banking experience, a rare sight on the board. Equally, he would be an outsider, another unusual quality given the number of directors who have held their posts for a decade or more.

The only really experienced investment banker at board level is Chairman Paul Achleitner, who is as much part of the problem as anyone else below him. Replacing CEO John Cryan -- appointed less than two years ago -- could easily unleash pressure to give up his own job. Revamping the board may be a less radical step than replacing the CEO, but it could be a reasonable compromise to effect some change at the top.

Deutsche Bank needs someone who can authoritatively raise the prospect of a break-up, or asset sale, or partnership, however reckless, rather than stick to the path of death by a thousand cuts. Even if the parallels between Deutsche Bank and Merrill aren't perfect, given that nobody is crying out to buy a business dependent on investment banking with $1.8 trillion of assets, Thain can actually claim to have thrown in the towel and sold.

Deutsche Bank is cheap, and troubled. It has been so for some time. Rather than wait for strategic tensions to spill over into yet another battle, it's right to shake up the supervisory board -- the one constant amid the lender's recent troubles.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

Lionel Laurent is a Bloomberg Gadfly columnist covering finance and markets. He previously worked at Reuters and Forbes.

To contact the author of this story: Lionel Laurent in London at llaurent2@bloomberg.net.

To contact the editor responsible for this story: Edward Evans at eevans3@bloomberg.net.

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