William Broeksmit, a recently retired executive at Deutsche Bank AG (DBK) who worked at Merrill Lynch in the 1990s with Anshu Jain, now Deutsche Bank’s co-chief executive officer, has died. He was 58.
He died on Jan. 26 at his home in London, according to a memo to employees obtained by Bloomberg News. Deutsche Bank spokesman Michael Golden confirmed the contents, which didn’t give a cause. In an interview, a spokesman for the London police said a 58-year-old man was found hanging in a residence on Evelyn Gardens, the street where Broeksmit lived, and that authorities aren’t treating the death as suspicious.
“He was considered by many of his peers to be among the finest minds in the fields of risk and capital management,” Jain and co-CEO Juergen Fitschen wrote in the memo. They said Broeksmit was “instrumental as a founder of our investment bank” and called him “a dear friend and colleague to many of us who benefited from his intellect and wisdom.”
Broeksmit had two stints at Frankfurt-based Deutsche Bank, Europe’s biggest investment bank by revenue, first from 1996 to 2001, then from 2008 until his retirement last February. He worked as an independent consultant in the interim. When he rejoined the bank in 2008 it was in a newly created position, head of portfolio risk optimization.
In 2012, as they prepared to take over as CEOs, Jain and Fitschen advanced Broeksmit’s name to become the new chief risk officer. The bank retreated on his nomination after German financial regulator BaFin raised concerns that Broeksmit’s lack of experience managing a large number of employees.
Stuart Lewis was named head of risk management instead.
Broeksmit “was a pioneer in interest rate swaps” while at Continental Bank in Chicago “and brought his expertise to Merrill Lynch,” Janet Tavakoli, who managed asset swaps under Broeksmit at Merrill in the late 1980s, said today in an interview. “He was brilliant.” Tavakoli is president of Tavakoli Structured Finance Inc. in Chicago.
At Merrill Lynch, Broeksmit’s work on interest rate swaps drew the attention of Jain, who had joined the firm in 1988 and was looking to sell more products to hedge funds. Interest rate swaps are contracts to exchange fixed-rate payments for floating-rate ones over a period of years.
At Jain’s encouragement starting in 1994, Broeksmit and Merrill agreed to trim the profit it made on swaps to induce hedge funds into the market, Broeksmit said in an interview for a 2005 story in Bloomberg Markets magazine.
Investment Dealers’ Digest reported in 1995 that Merrill Lynch had named Broeksmit head of global equity derivatives, one of a series of promotions that followed the departures to Deutsche Bank of Grant Kvalheim, co-head of debt capital markets, and Michael Philipp, head of equity derivatives and debt and equity futures.
Broeksmit had been recruited to Merrill several years earlier by Edson Mitchell, a former head of fixed income who also moved to Deutsche Bank and was a mentor of Jain as well.
Broeksmit and Mitchell, in a 1993 memo, warned Merrill management of “potential adverse consequences” for Orange County, California, a client, “in the event of a substantial increase in interest rates and the flight of hot money” from the county’s investment pool, the New York Times reported in 1998. Their warning proved on the mark.
Orange County, the nation’s fifth most-populous county, sought protection from creditors in 1994 after losing about $1.7 billion on derivative investments. That was at the time the nation’s biggest municipal bankruptcy.