Mass redundancies at a Bank saw a manifestation of Human Risk in action.
But not in the way you might think…
Last week photographers were camped outside the offices of Deutsche Bank, waiting for the kind of iconic image last seen when Lehman Brothers collapsed in 2008. Sadly for them, images of bankers carrying cardboard boxes containing their personal possessions are generally confined to situations where the employer can no longer control the situation. Redundancy programmes in Banks are carefully stage-managed to ensure that thousands of people who are surplus to requirement showing up for work, cause as little disruption as possible. And to avoid the very Lehman-style photos the photographers wanted.
It was left to Alex Riley and Ian Fielding-Calcutt to become the “human” story the press were looking for. The pair work for a bespoke tailor and were photographed emerging from Deutsche’s London offices on the day the redundancies were enacted, branded suit carriers in hand. Opulent optics that sat at odds with Deutsche’s desired messaging of compassionate corporate austerity.
In a Handelsblatt interview, CEO Christian Sewing said he couldn’t understand that someone would arrange an appointment to fit a tailored suit on the day redundancies were being announced. Perhaps mindful of the pre-2008 crisis images of banker profligacy, he had put in calls to those responsible in a way that “they wouldn’t forget”. This behaviour, he said, “in no way corresponds with our values“.
On the face of it, ordering bespoke suits might seem at odds with a redundancy programme. But on closer examination, the two are entirely unrelated; one is the enactment of a corporate strategy, the other a personal decision by employees on how they spend their money. By default, mass redundancy programmes illustrate clearly that the interests of employer and employee aren’t always entirely aligned.
The announcement of redundancies at Deutsche was made on a Sunday afternoon, to allow them to execute the programme first thing on the Monday. Bespoke tailors do not generally suddenly appear at their client’s offices, so the idea that someone would intentionally set out to arrange a meeting that “clashed” with the redundancies is extremely unlikely. It is much more likely that the appointments were booked ahead of the announcement, giving very little chance of cancellation.
Even if there had been enough time to cancel, it is not clear why anyone should feel obliged to do so. Deutsche, in common with other Firms, employs some highly paid bankers who are entitled to spend their money as they see fit. Some choose to do so by purchasing expensive bespoke suits from tailors that do office visits; partly because they can, but also because their working hours and culture discourage the alternatives. No matter how unhelpful it might be to the story Deutsche wished to promote in the media, the decision to have a Monday meeting with a tailor is neither illegal nor in breach of regulations.
As a seasoned Banker, Sewing will know why people choose to order bespoke suits. It is fair to assume that he doesn’t buy his off-the-peg. To haul senior employees over the coals for this seems somewhat unfair. It shouldn’t have come as a surprise that the press would be camped outside his offices, looking for a human angle on the story. Instead of cardboard boxes, they got tailors. If they hadn’t got tailors they’d have looked for something else of note being taken into or out of the building. Pity, in those circumstances, anyone celebrating a birthday or wedding anniversary who was sent flowers or champagne in the office.
At a time when the Firm is facing major challenges, being “tough on suits” seems an odd use of CEO time. Choosing to emphasize quite how tough in a newspaper interview equivalent of a “perp walk”, adds fuel to an already hot internal fire. Nor is it likely to make departing employees feel any better about their situation; anyone working for a large Bank knows that senior executives are extremely well remunerated and that they wear tailored suits.
If it was designed to suggest a firm grip on the key issues facing the Firm, then it seems misguided. Public opinion won’t be won over by being tough on the timing of tailoring appointments; that dial will shift when bankers pay is seen to be more equitable. It’s less about when they have their suits fitted, but the fact they can still afford to do so as a matter of course. Had his point been more about banker profligacy than bad timing, then it might have been a little more compelling.
Equally, being tough on tailoring is unlikely to win regulatory plaudits. If Sewing is really serious about conduct and culture, then there are probably other calls he should be making and subjects he should be focussing on in interviews. Only last week it was revealed in the New York Times, that Jeffrey Epstein was a client of the Firm.
The bank provided Mr. Epstein with loans and wealth-management accounts, as well as trading services through its investment banking arm, according to two people familiar with the relationship. At one point, compliance officers at Deutsche Bank raised concerns about transactions by Mr. Epstein’s company, because he posed reputational risk to the bank, the people said. Deutsche Bank managers overruled their concerns, the people said. They noted that there was nothing illegal about the transactions and that Mr. Epstein was a lucrative client.
Epstein is no longer a client, but the ongoing reputational risks of that decision remain. It doesn’t appear to have happened on Sewing’s watch, but he owns the aftermath. Avoiding such issues in the future will require a culture underpinned by strong values where staff, particularly those in Compliance and Risk, feel supported in doing the right thing. Creating an environment of psychological safety, where people feel able to speak up, requires trust in how management will respond.
The irony here is that the reason people buy bespoke suits is to look good. By focussing on the timing of the tailoring arrangements of a few senior managers, Sewing has attempted to do the same thing. Sadly, like a cheap suit, what this has achieved seems rather ill-fitting for the challenges his Firm is facing.