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Deutsche Bank CEO Under Fire

The World According to Josef Ackermann

By Armin Mahler

The CEO of Deutsche Bank Josef Ackermann is justifiably proud of the fact that his bank has so far been able to weather the financial crisis better than many of its competitors. But he still hasn't won any sympathy points. Perhaps his self-image is to blame.

German Chancellor Angela Merkel had invited an illustrious group of guests to the Chancellery to honor a man from the business world whom she especially admires: Josef Ackermann, the CEO of Deutsche Bank.

Today, it would be more accurate to use the past tense -- to say that Ackermann was a man she once admired.

At the time, in February of this year, the chancellor's relationship with her favorite banker was still in good shape. The dinner in Berlin was Merkel's way of thanking Ackermann for having invited her to his 60th birthday celebration, which she was unable to attend due to scheduling conflicts.

Nowadays, the news is that Merkel was apparently irritated over the awarding of the North Rhine-Westphalia Future Prize to Ackermann. Deutsche Bank, in the mean time, has announced that its CEO will not accept the prize.

In February, at the post-birthday party at the Chancellery, the dinner discussion revolved around Heinrich von Pierer, the former CEO of Siemens, a man who was once greatly admired in Berlin and had since lost his good reputation in a flurry of corruption charges.

Not Dependent on Government Assistance

Today Ackermann is the bogeyman in Berlin, across all political party lines. The reason for his fall from grace can be summed up in a single sentence: "I would be ashamed if we were to accept government money in this crisis."

Those were Ackermann's words last Thursday, when he spoke at Deutsche Bank's annual meeting of senior executives. This time, because of the crisis, it was taking place via videoconference. Ackermann's address was a pep talk, says one of his employees. It was meant to convey a sense of pride that Deutsche Bank had fared better in the crisis than most of its competitors and that, unlike the others, it was not dependent on government assistance to survive.

But that very same sentence, which SPIEGEL made public last week, was not well received in Berlin. Merkel's cabinet referred to Ackermann's remark as "extremely questionable," as "completely incomprehensible and unacceptable" and as "offensive," Thomas Steg, the deputy spokesman for the German government, reported. The government cannot comprehend why Ackermann has so clearly distanced himself from the €500 billion ($635 billion) bank bailout package -- a plan which he himself helped to put together. His comment seems to have stigmatized those who accept the aid, thereby jeopardizing the entire program. That, at least, was the way the politicians interpreted the banker's words.

Officials at the bank's headquarters in Frankfurt were perplexed by the reaction, noting that Deutsche Bank has every right to state that it does not need the assistance. They add that Ackermann has publicly stressed the importance of the program, and has emphasized that no one should reject necessary assistance out of a false sense of prestige.

In short, two worlds are colliding, worlds that are both unable and unwilling to see eye to eye.

On the one hand, there are the politicians, irked for years by the know-it-all, and better paid, captains of industry and finance, who have looked down on politicians and now, in their hour of self-inflicted need, are suddenly calling for the state to bail them out. The German government was forced to rush through a €500 billion ($635 billion) bailout package that uses taxpayer money to rescue the banks, while at the same time being faced with the fact that there is no money left for education.

No Bonus this Year

On the other hand, there is Ackermann, for Germans the epitome of a banker. Ackermann is a man who earned €14 million ($18 million) last year and now says that he will do without a portion of his bonus this year to set an example.

The politicians consider it outrageous that bonuses are even being paid at a time when the government is spending billions in taxpayer money to bail out the banks. Ackermann's decision to forego some of his bonus was "purely for show," says Peter Struck, floor leader for the center-left Social Democrats (SPD).

Close advisors to Ackermann say that he was surprised and disappointed by this reaction. Ackermann himself has refused to comment publicly. The man who, as the NRW Future Prize jury wrote in explaining its decision to honor Ackermann, "has faced harsh criticism with admirable directness and openness," is remaining tight-lipped.

Once again, Ackermann sees himself unfairly targeted for criticism. There is no overlap between his public image and his self-image.

For Germans, the Swiss banker, with his winning smile, has become the prototype of the cold-hearted capitalist, and the name Ackermann synonymous with the arrogance of power. In a recent SPIEGEL poll, only 5 percent of respondents said that Ackermann feels committed to promoting social welfare and the good of the country, while 87 percent said that he acts purely in the interest of his bank and its stockholders.

Ackermann, on the other hand, sees himself not only as the man who brought Deutsche Bank back into the global big leagues, thereby strengthening the German economy, but also as a manager who is committed to national interests and the welfare of Frankfurt as a financial center. He is also a person who, despite his millions, lives a relatively modest life and donates a large share of his income to charity.

Ackermann and the Germans have had trouble seeing eye to eye from the start. The banker says what he thinks, undisguised and undiplomatically. He considers his approach to be authentic. But what he lacks is the ability to recognize how his words sound to people who do not spend much of their lives jetting back and forth between Frankfurt, London and New York.

"Germany is the only country where those who are successful and create value are put on trial for their troubles." That was one of Ackermann's authentic sentences, uttered in January 2004 at the beginning of the infamous Mannesmann trial, brought to look into alleged irregularities in the 2000 Vodafone takeover of Mannesmann. That quote, along with a photograph of Ackermann flashing a victory sign on the first day of the trial, has haunted him to this day.

Feted in the Press

Ackermann could not -- and cannot, to this day -- understand why he faced charges for having approved millions in bonuses to executives when he served on the supervisory board of the Mannesman Group after it was taken over by Vodafone. Such golden parachutes were common practice the world over, he said in his defense.

The suit was eventually dropped in exchange for a financial settlement. After that, the relationship between the Germans and their most important banker seemed to improve. Ackermann became increasingly down-to-earth, suddenly appearing at numerous events around the country and even agreeing to be interviewed twice by talk show host Maybrit Illner. When he announced, on his 60th birthday on Feb. 7 of this year, the bank's 2007 record earnings of €6.5 billion ($8.25 billion), he was feted in the business press.

But the financial crisis caught up even to Ackermann over time. Bit by bit, Deutsche Bank was forced to write down billions in bad loans, although its losses were not as severe as those of many of its competitors. Nevertheless, as recently as March Ackermann insisted that there was no systemic crisis. And at a bank meeting only a few weeks ago, he announced the "beginning of the end of the crisis."

"I saw most things correctly," Ackermann says today. "I did not expect, however, that Lehman would be allowed to go under. That was not foreseeable, and it changed everything."

According to Ackermann, he was the one who pointed out in February, referring to the real estate crisis in the United States, that concerted action by governments and central banks would become necessary. He also says that he called for a coordinated worldwide solution and the rethinking of some accounting rules early on -- and that he was sharply criticized in public for his views.

By the time of the Lehman bankruptcy, it was clear to everyone, bankers and politicians alike, that the crisis was indeed a fundamental one, and that the entire system was threatening to implode.