In Dutch At Deutsche Bank

Privately, Deutsche Bank (DB ) CEO Josef Ackermann is polite and thoughtful, say those who know him. "He is a very kind person and very intelligent," says Reinhard H. Schmidt, a professor of banking at the University of Frankfurt who has taught seminars with Ackermann.

But just tell that to the average German citizen. The 57-year-old Swiss-born banker has become the embodiment of capitalist greed, at least in the mind of the public. His image wasn't helped when, on Dec. 21, Germany's highest appeals court reinstated charges of breach of trust stemming from British mobile-phone provider Vodafone Group PLC's (VOD ) acquisition in 2000 of German mobile company Mannesmann. Ackermann will be retried on charges that he and other members of Mannesmann's supervisory board illegally awarded multimillion-dollar bonuses to top Mannesmann executives such as CEO Klaus Esser. And Deutsche Bank has enraged German retail investors by freezing a troubled $7.2 billion real estate investment fund.

The pressure has reached the point where Ackermann may be forced to resign. At the very least, the pending retrial and other controversies are a serious distraction as Ackermann works to restore Deutsche Bank's international stature. Since he took over in 2002, the bank's net profit has risen ninefold, to an estimated $4.3 billion for 2005. Thanks to cost-cutting and an upswing in global capital markets, the bank is expected to hit its goal of a 25% pretax return on equity this year. That would bring Deutsche Bank closer to global profitability standards, though still well behind leaders such as Switzerland's UBS (UBS ) or Britain's HSBC Securities Inc. (HBC ) Investors have taken note: The bank's shares are up 27% this year.

Applause from fund mangers may not be enough to save Ackermann. If convicted in a second trial, which won't begin until this summer at the earliest, Ackermann would certainly have to resign, insiders concede. If he does, the lesson may be that Germany is a very difficult environment for a bank with international ambitions. Ackermann has continually been caught between the demands of shareholders, most of whom are abroad, and the expectations of German customers. Stockholders want more profits; but Germans are against growth at the expense of thousands of jobs. And small investors who bought shares in the troubled property fund want the bank to prop up the fund, which goes against the interests of bank shareholders.

German press speculation about Ackermann's successor focuses on Rainer Neske, head of private and business clients for Deutsche. If Neske gets the job, that would signal a shift back to retail clients. But any letup in the bank's drive for better profits would hurt the stock and make the bank a takeover target. Whoever winds up in charge, keeping the "Deutsche" in Germany's signature bank will be no easy task.

By Jack Ewing in Frankfurt

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