Michael Coers' Bittersweet Exit from Deutsche Bank

Michael Cohrs, co-head of investment banking at Deutsche Bank (DB), is retiring just as the bank is becoming a global leader in mergers and acquisitions. So far this year, Deutsche Bank, which long trailed its Wall Street rivals, is now the top takeover adviser in Europe, No. 3 in Asia, and third behind Goldman Sachs (GS) and Morgan Stanley in the U.S., the world's biggest M&A market, according to data compiled by Bloomberg. Globally, the Frankfurt-based bank ranks fourth. "We've been working at this for a decade," says Cohrs, 53, in an interview at the firm's offices in London's financial district. "It's an ongoing buildup, but people are taking us seriously as someone they trust for advice."

Cohrs, who joined Deutsche Bank from S.G. Warburg in 1995 and has run investment banking with Anshu Jain since 2004, is planning to retire in coming weeks, according to two people with knowledge of the situation. Jain, head of sales and trading, the bank's biggest moneymaker, is likely to assume his responsibilities, said the sources, who asked not to be named because no announcement has been made. Cohrs declined to discuss his departure.

Deutsche Bank this year gave Qwest Communications (Q) advice on its $10 billion acquisition by CenturyTel and worked with MetLife (MET) on the insurer's purchase of American International Group's (AIG) Alico unit for $15.5 billion. It advised SAP (SAP) on its $5.3 billion takeover of Sybase.

"Deutsche Bank has certainly joined the bulge bracket in terms of M&A," says Scott Moeller, a professor at Cass Business School in London. "They will have to push hard to maintain their place and ensure the success is not just a flash in the pan."

Even as Deutsche Bank rises in the deal rankings, its M&A fees trail competitors'. The bank generated $210 million in revenue for merger advice as of the end of April, compared with $543 million for Goldman Sachs (GS) and $434 million for JPMorgan Chase (JPM), according to data from Freeman & Co., a New York-based research firm. That may reflect situations where the bank got credit for working on a deal but had a lesser advisory role, says Jeffrey Nassof, an associate at Freeman.

M&A remains a fraction of Deutsche Bank's revenue, accounting for less than 2 percent of the total $11 billion in the first quarter. "One of the conundrums is that while M&A may not be the biggest or most profitable business," says Cohrs, "it is clearly at the heart and soul of an investment bank because it signals the strength of your relationships."

The financial crisis turned out to be a boon for Deutsche Bank's M&A business. According to Bloomberg, the firm ranked ninth globally in mergers and acquisitions in 2007, a year before the collapses of Bear Stearns and Lehman Brothers ushered in the global credit crunch. As a result of the crisis, clients flocked to financial companies seen as solid. Unlike its largest U.S. competitors, Deutsche Bank didn't have to take a government bailout. It didn't raise capital from shareholders as Barclays (BCS) and HSBC (HBC) did, or get investments from sovereign wealth funds like Swiss rivals UBS (UBS) and Credit Suisse (CS). "The crisis for us was quite good in some ways," says Cohrs. "People wanted to feel safe and secure. In the U.S....we started to talk to people who hadn't wanted to talk to us."

The crisis helped in another way: M&A heads Brett Olsher, 49, an American, and Norwegian Henrik Aslaksen, 46, accelerated hiring as rivals went under or were acquired. Deutsche Bank has lured 151 new bankers in corporate finance since late 2007.

Cohrs, an American, had originally timed his departure to coincide with the retirement of Chief Executive Officer Josef Ackermann, who was to step down in May. Ackermann agreed last year to stay for another three years because the board couldn't agree on his successor.

For Deutsche Bank, a top priority will be retaining hires, as the sector recovers and competition for talent intensifies. "Deutsche Bank has grown very fast and hired a lot of people from outside," says Ingo Walter, a professor at New York University's Stern School of Business. "If there are lots of external opportunities, there can be a 'why stay?' mentality."

The bottom line: Cohrs's efforts to build the M&A business got a boost from the credit crisis. Now Deutsche will have to hustle to hold its place.

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