Score One For The Boat Rockers At Deutsche Bank
Last winter, Rolf-Ernst Breuer confided to friends that he was so fed up with the infighting among top managers at Deutsche Bank that he was thinking about leaving. Instead, the 58-year-old director's career just took a dramatic turn in the opposite direction. On Oct. 30, the bank that hired Breuer as an apprentice in 1956 announced that he will take over when chief executive Hilmar Kopper retires next May.
The move strengthens Deutsche's aggressive push into global investment banking. It also shows who won the internal tug-of-war between the conservatives who favor an old-fashioned German management style and those who say the bank needs an overhaul. Breuer, who became chief of the bank's investment and trading department in 1974, is one of the main architects of Deutsche's global investment banking strategy. An affable, plain-spoken man, he is expected to reinforce the trend to greater openness at Germany's largest bank. "We've got to put shareholders at the center of our efforts to build transparency," he told BUSINESS WEEK in a recent interview.
Breuer's ascension was greeted with applause. "The investment bankers are happy about this," says Frederick Haller, head of emerging markets at its London subsidiary, Deutsche Morgan Grenfell. Breuer has a "clear understanding of markets deep down in his bones." Agrees Richard Phillips, a New York investor relations consultant: "In terms of mindset, he's the right man." Investors voted their confidence by pushing up Deutsche shares the day of the announcement.
Breuer has proved his commitment to opening up German capital markets and modernizing its banking sector. At Deutsche, he has driven the bank's recent hiring binge, a strategy designed to build a potent investment banking business by snaring talent. Now, Breuer's task is making the massive investment in people and new equipment pay off.
THE BOOT. Breuer is well aware of Deutsche's weaknesses. For instance, the bank reacted too slowly to the 1980s investment boom. "We have to criticize ourselves for not having the foresight five or six years ago to try to establish a globally integrated investment bank," he says. When scandal rocked Morgan Grenfell Asset Management Ltd. this fall, Breuer acted fast. Four managers got the boot, and Deutsche paid $280 million to cover potential losses at two funds
Breuer is also concerned about Germany's competitiveness problems. As head of Deutsche's worldwide trading activities since 1985, he has watched Germany's stock markets lag sleepily behind London, New York, and Tokyo. He headed a decade-long battle to wrest power from the country's regional exchanges and consolidate trading in Frankfurt. And he pushed big investments in electronic equipment to process sales. Breuer chairs the supervisory board of Deutsche Borse, which runs the Frankfurt stock market and the futures and options exchange.
Since the new CEO is only three years shy of mandatory retirement age, the the banker who will complete Deutsche Bank's long-term transformation is still unknown. But with so many successes under Breuer's belt, it's no wonder a demanding new job found him, rather than vice-versa.