April 14, 2021

Mr. Wolf of Wall Street receives the "most difficult assignment in the world" | Economy

Mr. Wolf of Wall Street receives the "most difficult assignment in the world" | Economy

Deutsche Bank and Commerzbank study merger. Behind the scenes of the negotiations is Matt Zames. As the character of Mr. Wolf from the movie Pulp Fiction, Zames is an expert in "solving problems". Deutsche Bank, the big junk debt packager, the same harmful product that would end up sinking Lehman Brothers, asked for help last July to Cerberus Capital to help him fine-tune his operations and get him out of the losses. And at the head of the colossus of American venture capital is this former manager of hedge funds (hedge funds), who had previously worked for JPMorgan Chase, where he had to face another Brown: the scandal known as the whale of London, for which the bank suffered millionaire losses due to the irregular practices of some of its traders.

When asking for help from Cerberus, Deutsche Bank thus hired the one that at the same time is one of its main shareholders and client. Last summer it was already evident that the strategic plan to return the entity to the old glory was not going anywhere and needed a change of direction. Losses piled up and shareholder value plummeted, while its global rivals advanced steadily and strengthened. Zames took over the team of advisors with the task of sweeping under the carpets.

Mr. Wolf of Wall Street is what in the world of gangsters is known as a fixer, a problem solver. Although in your case you do not need to go threatening with a baseball bat. The finance, in any case, is a complex business and you need a figure with a firm hand. His experience, said Deutsche Bank at the time of his hiring, was aimed at supporting his cleanup efforts.

For those who believe in coincidences, this ancient trader assumed the presidency of Cerberus at the same time that Christian Sewing was named CEO of Deutsche Bank. Although by contract he is technically a consultant and must report directly to him, behind the scenes he is seen as the virtual CEO of the German group. His good management of the crisis of the London whale he put him in front of the pools to replace Jamie Dimon in JPMorgan, and when he left the bank to sign for Cerberus his name also sounded to lead Deutsche Bank, although he himself discarded, because family issues did not want to be long out from the USA Finally, the chosen one was Sewing, but, ironies of destiny, Zames has ended up linked to the German financial giant.

The challenge of putting Deutsche Bank in shape is monumental, with multiple pieces in motion. One of the ways that is analyzed is a union with the great local rival, Commerzbank, also afflicted with different problems and where, curiously, Cerberus is also a shareholder. As it happens in many occasions, the risk capital is judge and part. And being on both sides of the table always ensures you emerge victorious.

Deutsche Bank, a key player in the global financial framework, is plagued by problems. Last summer, the Federal Reserve suspended its capitalization plan after detecting critical deficiencies. Rating agencies, meanwhile, have lowered the level of solvency to their debt issues. And, if that was not enough, he faces several scandals.

The union of the two rivals is seen favorably by the German government, which controls more than 15% of Commerzbank since the rescue of the entity, which is still experiencing difficulties to return to profitability. It is a possibility that they already tested in 2016. But Sewing tried to focus on restructuring the group before engaging in an operation of such magnitude and complexity.

Cerberus would also be open to the merger, which further raises the possibilities of the alliance at this time. Matt Zames thus becomes a key figure in moving the strings. The executive has two decades of experience in leadership positions in the industry. Before being hired by Cerberus, he worked for five years as chief of operations for JPMorgan Chase. Orchestrated under the baton of Jamie Dimon the rescue of Bear Stearns, the first victim of the financial crisis, and among his last tasks had to repair the damage caused in his London subsidiary. Prior to joining the JPMorgan management structure, he was with Credit Suisse, the Treasury Department and the New York Federal Reserve.

Broad powers

This 48-year-old financier, who graduated from the Massachusetts Institute of Technology, joined Cerberus in April 2018. As the firm points out, he has responsibilities in all global businesses and is in charge of the most important strategic investments, as well as other operational initiatives. That includes monitoring all investments in the financial services industry.

The fund manages assets (stocks, debt and real estate) worth 30,000 million dollars. In the case of Deutsche Bank, where it controls 3%, it has been fully involved in operations for nine months. The signature of private equity he usually provides advice to the companies in his investment portfolio in exchange for a commission. As he points out The Wall Street Journal, Zames' work is "the most difficult in the world" because the mess he must fix is ​​"colossal". That, the newspaper notes, is creating friction between New York and Frankfurt. The culture, rhythms, patience and forcefulness among the investment bankers in the two capitals are very different. Analysts try to understand what Cerberus can bring to the equation that Deutsche Bank can not do on its own. If Zames is successful, it will not only be helping Deutsche Bank emerge from a crisis that worries both regulators and politicians alike. It will also serve to save the bet of Cerberus.


Training. Matt Zames, 48, lives in New Jersey with his family. He graduated in 1993 from the Massachusetts Institute of Technology.

the beginning. His first steps in the world of finance were in Credit Suisse, where he led the team that operated in the currency market. Previously he had been chairman of the US Treasury loan advisory committee.

Takeoff. After leaving Credit Suisse, he signed in 2004 for JPMorgan Chase. In the American bank he held different positions of responsibility before being appointed operational director of the entity.

Transfer Early in 2018 Zames left JPMorgan Chase to enlist in the ranks of Cerberus as president of the firm.


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