Manfred Schmoelz, Deutsche Bank’s chief country officer for Thailand, will leave at the end of this month after working at the bank for more than two decades. According to market rumours, he is expected to join rival Royal Bank of Scotland in a coverage role based in Singapore after a two-and a-half-month gardening leave.
Before his appointment as chief country officer in April 2009, Schmoelz was Deutsche Bank’s head of corporate banking coverage for Asia Pacific, based in Singapore. He is said to be keen to return to a coverage role, as well as reuniting with his family, who remain in Singapore. Schmoelz, who hails from southern Germany, has been working in Asia for 15 years.
As country head in Thailand, Schmoelz was responsible for all of Deutsche Bank’s local business lines and employees, and its relationship with Thailand’s banking regulators, central bank and other institutions, according to a release on his appointment back in 2009.
The market is watching closely to see who Deutsche Bank appoints to replace him in Thailand. This, some say, will signal whether the bank plans to make any changes on how it runs its business in Thailand.
“It will be interesting to see whether they hire a markets or treasury person who is more of a gunslinger, or a person with a legal and compliance background who is likely to be more conservative,” said one source.
Deutsche Bank has taken some heat from the Thai regulator in recent months. Effective from May 3, it was removed from the dealer list for repo transactions with the central bank. Although it has not made any public announcements, an official at the central bank told FinanceAsia that the bank was removed from the list as it “did not fully comply with the rules and regulations”. He declined to give further details.
Since then, Deutsche Bank has been quick to point out that its absence from the list has a limited effect on its business. This is not the first time the bank has been dropped from the list.
“Deutsche Bank ceased to participate in the bilateral repo activities of the Bank of Thailand (BOT) from April 2011. Deutsche Bank remains a primary dealer in bond trading with the BOT. Other than the bank’s ability to repo specifically with the BOT, the bank’s government bond trading and other extensive business activities in Thailand, are unaffected” said Michael West, a spokesman at Deutsche.
The bank’s repo trading with central bank might not have been an integral part of its Thai business, but its brush with the regulator does not help the bank. “It’s reputational risk,” said one banker.
Deutsche executives know this only too well. In February this year, the bank ran afoul of Korean regulators and was slapped with a six-month ban on trading shares and derivatives for its own account after the Financial Services Commission found that Deutsche staff in Hong Kong and New York conspired with the bank’s Korea securities unit to manipulate prices.
The ban had no relation whatsoever to Deutsche’s fixed income division, but the bank was conspicuously absent from mandates when quasi-sovereign Korean borrowers tapped the bond market earlier this year.
In Thailand, the government recently kicked Deutsche (and Standard Chartered) off the mandate for its first inflation-linked bond in favour of HSBC — though this decision was said to be about pricing rather than politics.
However, Thailand is a much smaller market than Korea for most international investment banks. “Deutsche Bank is not active in the baht bond business and, unlike in Korea, there isn’t a lot of offshore bond issuance from Thailand,” said one banker. “The few Thai borrowers such as PTT tend to make their decisions independently.”