Deutsche Bank AG (DBK) Chief Executive Officer Josef Ackermann abandoned a plan to become supervisory board chairman in 2012 because Europe’s debt crisis hasn’t given him the time to win shareholder support.
Deutsche Bank will instead nominate Paul Achleitner, the finance chief of insurer Allianz SE (ALV), the Frankfurt-based lender said in a statement yesterday. Ackermann will step down as chief executive as planned in May, to be succeeded by Juergen Fitschen and Anshu Jain.
Ackermann, 63, Deutsche Bank’s CEO for the last nine years, was set to replace Clemens Boersig as chairman in May. The change, announced in July, drew criticism from politicians including Wolfgang Bosbach, a member of Chancellor Angela Merkel’s Christian Democratic Union, because it ran counter to German corporate governance rules. Since then, Deutsche Bank shares have fallen 25 percent as Europe’s debt crisis led regulators to order banks to boost capital to shield against market turmoil, and lenders agreed to share losses on Greek sovereign debt.
“An immediate candidacy by Mr. Ackermann for the role of supervisory board chairman would have led to potential conflicts of interest and resulting reputation risks for Deutsche Bank,” said Markus Temme, a spokesman for Union Investment GmbH, in an e-mailed response to questions. Union Investment owns 0.64 percent of Deutsche Bank shares, according to data compiled by Bloomberg. “We welcome the decision.”
Ackermann’s elevation would have made Deutsche Bank the first DAX Index (DAX) member to seek an exemption to German rules introduced in 2009 that call for a two-year grace period before a CEO can accept the role of supervisory board chairman. A clause in the 2009 rules grants an exception if the candidate has the support of shareholders controlling at least 25 percent of the voting rights.
Ackermann has told people close to him he made his decision a few weeks ago after initial talks with investors showed he may not have their support for the chairmanship because of governance concerns, according to two people familiar with the matter who declined to be identified. He then went to Boersig to tell him about his decision and Deutsche Bank started discussions with Achleitner, they said. Talks about finding a new chairman preceded the prosecution’s raid of Deutsche Bank’s offices last week related to the Kirch trial, they said.
The lender had sought Ackermann’s election to the post so that it would “continue to profit from his knowledge, experience and professional network,” it said at the time.
Deutsche Bank shares fell 1.1 percent to 28.33 euros as of 11:18 a.m. in Frankfurt, valuing the bank at about 26 billion euros ($35 billion).
“The extremely challenging conditions on the international financial markets and in the political-regulatory environment demand his full attention” as CEO, Deutsche Bank said of Ackermann in yesterday’s statement. “This does not allow enough scope for the many talks with individual shareholders necessary to implement the original plan.”
German Finance Minister Wolfgang Schaeuble welcomed Ackermann’s decision to abandon his plans to become chairman, Handelsblatt reported, citing an interview. A CEO shouldn’t switch directly into the position of chairman under corporate governance guidelines, Schaeuble told the newspaper.
Klaus Nieding, vice president of Germany’s DSW shareholder group, which represents investors holding more than 1 million shares, said he hopes Ackermann will at least remain an adviser to Deutsche Bank.
“I imagine that some investors signaled their reservations and he lost enthusiasm,” Nieding said by telephone today. “While I personally would have welcomed him as chairman, this could help end speculation about corporate governance issues.”
Ackermann, asked about the decision on the sidelines of a conference in Frankfurt yesterday evening, said: “Do I look like I’m sad and depressed? Probably not.”
Separately, UBS AG, Switzerland’s biggest bank, today confirmed Sergio Ermotti as chief executive officer. Chairman Kaspar Villiger will also step down at the annual shareholders’ meeting in 2012, a year earlier than planned, to accelerate the handover to Axel Weber, 54, who had been a candidate to replace Ackermann as CEO before he was hired by the Swiss bank.
Former Goldman Executive
Ackermann led Deutsche Bank through the credit crisis of 2008 without a government bailout, and has been at the center of the industry’s response to the European debt crisis. He serves as chairman of the International Institute of Finance, a Washington-based lobby group that represented banks and insurers in talks with European Union officials over the voluntary losses on Greek debt.
“I’m surprised,” said Matthew Czepliewicz, an analyst at Collins Stewart Hawkpoint Plc in London. “He has been one of the best bank CEOs out there, so this isn’t good for Deutsche Bank to lose him.”
Achleitner, 55, born in Linz, Austria, is a former head of the German business of Goldman Sachs Group Inc. At Allianz, he oversaw the unwinding of cross-shareholdings between the insurer and Munich Re, the insurer’s acquisition of Dresdner Bank in 2001 and the Frankfurt-based lender’s sale, announced in 2008. At Goldman, he advised Deutsche Bank on its $9 billion purchase of Bankers Trust Corp. in 1998.
Ackermann’s decision came as Munich prosecutors began an investigation of the CEO’s testimony in a civil suit over the 2002 demise of the late Leo Kirch’s media group. Ackermann and other bank managers in May testified about a management board meeting on Jan. 29, 2002, as part of the lawsuit filed by Kirch. They were quizzed by judges over the wording from minutes of the board meeting, discussing a possible Kirch group restructuring.
Kirch, who died in July, claimed Deutsche Bank secretly planned to damage his reputation in an effort to exert pressure on him. Part of that plan, Kirch said, was an interview former Deutsche Bank CEO Rolf Breuer gave on Bloomberg Television in which the executive said “everything that you can read and hear” is that “the financial sector isn’t prepared to provide further” loans or equity to Kirch. Within months, Kirch’s group filed the country’s biggest bankruptcy since World War II.
Along with Ackermann, Breuer and other officials who testified are being investigated, Deutsche Bank spokesman Detlev Rahmsdorf said in an interview yesterday. Prosecutors searched Deutsche Bank offices as part of the case.
‘More Comfortable Situations’
“There are more comfortable situations you can think of for someone seeking to become chairman of a big bank,” said Hanno Durth, a criminal defense lawyer in Darmstadt, Germany, who isn’t involved in the case. “Third parties involved in the case could also use tactics to prolong it, like asking for the access to the prosecutors’ files. These are all factors outside the bank’s control.”
Deutsche Bank filed a motion to have the three judges in the 2 billion-euro civil case removed because of “possible illicit cooperation” with prosecutors, he said.
“We only learned about this last week and immediately filed to have the bench removed,” Rahmsdorf said, calling the criminal probe “baseless.”
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