I have just finished reading Dark Towers: Deutsche Bank, Donald Trump and An Epic Trail of Disruption by David Enrich. It is a fascinating book and well worth reading. The book, like the title, does not always hang together as a single story. Rather it is two books for the price of one.
The author spent considerable time and effort to research this book including many interviews with individuals directly involved in the events or with access to documents over the events he covers. His writing style is very engaging giving you the sense of being in the room as the events unfold. Dark Towers often like a thriller but is even more interesting as it is based on true events and real people.
The first book is the thriller over the history and misdeeds of Deutsche Bank – going back more than one hundred years. This book is a sad and long story of how Deutsche Bank, similar to other large banks, lost its way with a focus only on short term financial returns. As a story of how bankers can do wrong, it is hard to top. And well worth reading by those concerned about the need for change in banking.
I found the second book even more important. This book provide provides key lessons for how banks need to operate. Throughout there are references to the importance of banks being trustworthy, especially for their clients. Towards the end of the book, Enrich summarises four key lessons for banks:
“(T)he eras of Ackerman and Jain had become parables for the perils of growing too fast, pursuing profits above all else, not caring about clients’ integrity, not taking the time to integrate businesses.”
A better summary of key lessons for banks from the last 20 years is hard to imagine.
He captures well how history and institutional memory within a bank are critical, especially as they relate to risk management and control. He notes the generational shift within banking and how his “hero,” William Broeksmit, was increasingly out of touch with the new generation of traders who were in charge of major portions of the bank. I believe anyone who worked in banking in this era recognizes that shift and its many negative consequences not only for banking but also society that is forced to clean up the financial mess left behind.
Enrich highlights the results of a focus only on high returns on equity for banking – very much the vogue at that time. Joseph Ackermann as CEO sought a return on equity of 25% per year even though the bank had never gone above 3%. Furthermore, Deutsche Bank had a large portion of its activities in Germany, a banking market with historic low returns. An open question is why the supervisory board and investors of Deutsche Bank believed those high returns were even possible.
So I highly recommend reading this book but suggest you do so with two minds. One mind focused on the sad but fascinating story of how bankers can make a mess. The other mind focused on the valuable lessons of how to run a bank sensibly. You will be rewarded on both
