German Bundesbank President Jens Weidmann arrives to present the annual 2018 report in Frankfurt, Germany, February 27, 2019. REUTERS/Kai Pfaffenbach - RC1BAF1225A0
After Jens Weidmann lost out in the race to be president of the ECB, some central bank watchers are speculating whether he will hang around for much longer © Reuters

Poor Jens Weidmann. After the head of Germany’s Bundesbank lost out to Christine Lagarde in the race to succeed Mario Draghi as president of the European Central Bank this year, he faces another long period in the monetary policy wilderness.

Unlike more internationally acclaimed central bankers like Mr Draghi himself, or Mark Carney at the Bank of England, the Bundesbank boss also seems to have fewer career options should he decide to leave and pursue a lucrative career in the private sector.

Once dismissed by Mr Draghi as Nein zu allem — which is German for “No to everything” — Mr Weidmann spent much of his first eight-year term fighting a lonely resistance to the ECB’s increasingly unconventional policies that have flooded markets with cheap money.

Having had his term renewed for another eight years in May, the 51-year-old is again gearing up to push back against a fresh wave of monetary stimulus at next week’s meeting of the ECB’s governing council.

His frustration was apparent when he told Frankfurter Allgemeine Sonntagszeitung recently: “Ever since the onset of the crisis, central banks have been widely regarded as the only institutions capable of taking action. I think that’s wrong.” Adding to the irritation of some at the Bundesbank is the feeling that they are the poorer cousins of their better paid and more powerful peers at the ECB.

Mr Weidmann has already become the third-longest serving president of the Bundesbank since its creation in 1957 — behind only Karl Blessing and Karl Otto Pöhl. Now some central bank watchers are starting to wonder whether he will hang around for much longer.

There was speculation over the summer linking him with a potential move to Deutsche Bank to replace Paul Achleitner as chairman of its supervisory board should shareholders force a reshuffle in response to the bank’s woeful share price performance. Such a move would follow a precedent: Axel Weber, his former boss at the Bundesbank, left the German central bank in 2011 to join UBS as chairman of the Swiss bank after losing out to Mr Draghi in the race to become ECB president that year.

However, for the head of the Bundesbank, which oversees all German lenders, to become chairman of the country’s biggest bank would provoke outrage in Germany, even if Mr Weidmann serves the likely two-year cooling off period. “The outrage would know no limits,” said the chairman of one of the biggest German companies.

Others reckon Mr Weidmann is an obvious candidate for a top job at Deutsche Börse, which is looking for a new supervisory board chairman to replace Joachim Faber when he steps down at next year’s annual meeting.

But the German exchange group has lined up Martin Jetter, the chairman of IBM Europe, as its next chairman, according to Manager Magazin. And since Theodor Weimer became its CEO last year, he has overseen a 37 per cent jump in its shares, suggesting a solid start.

So where does that leave Mr Weidmann? He has never worked in the private sector and might find the switch daunting. Even those who have made the transition say it is not easy. Lorenzo Bini Smaghi was a member of the ECB executive board for six years until 2011 when he switched into the private sector and has been chairman of French bank Société Générale since 2015. He said the transition is difficult but do-able.

“After two years of cooling off from the ECB, joining a large bank — in a non-executive position — was a great challenge: understanding how the money flows in the economy, not just how to create it,” said Mr Bini Smaghi. “One issue that central bankers — and also academics — have a hard time understanding is that banks are private companies that have shareholders which are interested in returns on their investments.”

Widely respected in Germany, Mr Weidmann has maintained the Bundesbank’s hawkish reputation as a guardian of strong currency and low inflation — often much to the annoyance of the ECB. Last year, he earned just over €463,000, which is a fraction of the more than $6m that UBS paid to Mr Weber — underlining the potential attraction of a private sector role. But his pay is more in line with that of Mr Draghi’s €400,000 salary.

So unless he is offered a top political job, such as German finance minister, expect Mr Weidmann to stay put — maybe even long enough to one day succeed Ms Lagarde.

martin.arnold@ft.com

Get alerts on Jens Weidmann when a new story is published

Copyright The Financial Times Limited 2019. All rights reserved.
Reuse this content (opens in new window)

Follow the topics in this article