When Frank Newman took over as chairman of Bankers Trust in 1996 it was reeling from the collapse of its core derivatives business following accusations - supported by damning evidence of tape-recorded telephone conversations - that its employees had duped American companies into complex and loss-making trades.
The outgoing chairman, Charlie Sanford, who had raised Bankers Trust from a mediocre commercial bank to a profitable laboratory of financial innovation, retired early. Sanford's chosen successor, Eugene Shanks, also quit. Shanks's victories in earlier turf battles had already seen off other senior managers who might otherwise have helped the bank through this crisis, such as Ralph MacDonald, former head of corporate finance, and Eward Lesser, former head of its transaction services division.
Newman inherited a bank long on problems, short on senior management. Though he is not an investment banker or a trader, his arrival was applauded inside and outside the bank. As the former chief financial officer of Wells Fargo and then of Bank of America, Newman had proved himself capable of managing his way through the challenges of fixing large and troubled banks. "If there's one thing that stands out about Frank Newman, it's control.