Another high profile banker falls off glory?

It was shocking to see Anshu Jain resign so quickly as a head of Deutche Bank. The Indian media had gone gaga over his appointment (as it always does) celebrating another Indian at the helm of global affairs.

And now there are reports that he was actually asked to go as he had misled the bank.

Deutsche Bank’s co-chief executive, Anshu Jain, might have “knowingly made inaccurate statements” to Bundesbank, Germany’s central bank, during investigations into manipulation of the inter-bank rate setting process, theFinancial Times reported online, citing a confidential report from German regulator BaFin. BaFin declined to comment on the matter. Deutsche Banktold Reuters it disputed the allegation that Anshu Jain had misled Bundesbank.

Earlier this month, a source told Reuters that Germany’s financial watchdog, BaFin, heavily criticised Deutsche Bank in its report investigating attempts to manipulate inter-bank interest rates such as the Libor (London inter-bank offered rate). The German regulator has been investigating Deutsche Bank and the role it played during the financial crisis, when a global inter-bank lending rate mechanism was being manipulated.BaFin recommended Deutsche Bank face “special banking supervisory measures” as a result, the Financial Timesreported, quoting the BaFin report .

Jain, who resigned as chief executive effective June 30, was accused of having “knowingly made inaccurate statements” in a 2012 interview with the German central bank, theFinancial Times said. Bundesbank could not be reached for comment.  Jain is alleged to have told the central bank he had no knowledge of rumours of possible rigging in 2008, but contemporaneous e-mails about a meeting on the subject were forwarded to him at that time, the Financial Times said.

Deutsche further said that report also addressed concerns about control-related issues, a number of which had since been rectified and others of which the bank was still working to improve. “As we have not yet responded to the BaFin report as part of the regulatory process, we believe it would be inappropriate to comment further publicly at this time,” Deutsche Bank said.

From the report, the Financial Times quoted BaFin’s lead banking supervisor, Frauke Menke, as saying, “I have been astonished to learn […] that the suggestion is that the audit by BaFin supposedly resulted in clearing the senior management of DB, especially Jain, and that supposedly no banking supervisory measures are expected…I expressly want to point out that this is not correct.”

Early days but perhaps another case of a steep fall from glory days. Central banking and banking have become curious industries of such steep rises and falls. All highly popular central bankers like Greenspan, Trichet and King were highly praised for ushering the great moderation and now are main villains in the crisis saga. Same with so many bankers as well.

This is because of the kind of publicity and hype central bankers/bankers seek and media obliges as it is its job. Media (and public) loves the rises and falls kind of stories and central bankers/bankers seem to be giving them enough fodder. I mean it must be giving such an ego boost to a central banker seeing markets dance to its tunes. One may obsess with free markets as an academic but on becoming a central banker, the tune changes completely. If one has the luck, such popularity surges and becomes a cycle of sorts. As the luck dries, the fall starts and cycle reverses.  Media obliges the czars of banking and finance each time. t was fine if this cycle was limited to such individuals. But it is not the case. The country/bank they lead gets into euphoric times during the surge only to lead to a disaster thereon.

It has become difficult to run finance related organisations without the hype and publicity. The hype bit is seen as a short cut to success and is a preferred path for many. But over a long run the whole thing could just go awry. Those who succeed in keeping a low profile and build the institution instead of their own image, eventually reap rewards both for themselves and the organisation.

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