Filling Ackermann's Shoes Power Struggle Hampers Search for New Deutsche Bank CEO
Deutsche Bank is locked in an internal management dispute over who should succeed Josef Ackermann as chief executive. The rift has been exarcebated by personal tensions between Ackermann and the head of the bank's supervisory board, Clemens Börsig. But Börsig now looks set to get his way.
The employees at the Berlin office of Deutsche Bank know what to do when Clemens Börsig, 62, announces his intention to pay them a visit. The chairman of the bank's supervisory board can get pretty unpleasant if he isn't served his customary bowl of fresh pineapple. He also insists on it being served on fine china made by the Royal Porcelain Manufacture Berlin.
One of those visits took place last Thursday, when Börsig was in Berlin to promote a campaign of sorts. In addition to making himself more and more unpopular with his quirks, the chairman has been seriously worried about his job. His adversary is CEO Josef Ackermann, 63. The power struggle between the two men has escalated in recent weeks in a dispute over who is to succeed Ackermann as CEO.
It has turned into something of a farce. Ackermann's contract expires in 2013. At that point, there will likely be two people running the bank, at least temporarily. Anshu Jain, the Indian head of Deutsche's investment banking operation, is the favored CEO candidate, but he lacks the necessary knowledge of Germany's political and corporate scenes, and he doesn't speak German, which means that at least initially, he won't be able to run the bank on his own.
For that reason, Ackermann favored Weber as co-CEO. But on the Friday before last, Weber suddenly announced that he had accepted the job of chairman of the major Swiss bank UBS. Many at Deutsche Bank, including Ackermann, believe that Börsig alienated Weber. They say that the supervisory board chairman, who is formally in charge of the search for a new CEO, had stalled Weber for too long.
The cockfight between the two top bankers is becoming more and more embarrassing for Germany's only world-class bank, only recently named "Best Global Bank 2011." Although Ackermann was supposed to retire in 2010, for years the two alpha males were unable to find a solution to the succession problem.
The dispute escalated for the first time in 2009, when Börsig proposed that he himself become the bank's next CEO. This prompted Ackermann to cancel his retirement plans and extend his contract by three years.
Threat to Oust Börsig
After Weber had turned down the job, Ackermann tried a different approach. In the board meeting last Tuesday, he reported that international investors had urged him to stay on board. And although he had insisted in April that he had no intention of becoming supervisory board chairman, he said that he did not wish to shirk his responsibility.
Then Ackermann, a Swiss national, who plans to announce Deutsche Bank's highest ever earnings of 10 billion for this year, looked his colleagues squarely in the eyes. Most members of the board supported this solution. Even Jain, who had long chosen not to take sides in the power struggle, welcomed Ackermann's decision.
Since then, however, Ackermann appears to have changed his mind again. The bank denied that Ackermann has any ambition to head the supervisory board, so Börsig's position seems safe for now.
Börsig has made few friends with his overbearing manner. His excesses have included inviting business associates to the tennis championships at Wimbledon and spending three days celebrating his birthday, complete with performances by opera singers in Baden-Baden. This sort of behavior hasn't played well since the financial crisis. It's said that Börsig likes to hold court. But he has kept his cards close to his chest in the search for a successor for Ackermann, which he had in fact promised would be an "orderly process."
Only the supervisory board's nomination committee, which includes Tilman Todenhöfer, Börsig's former colleague from his days at Bosch, and former Bayer CEO Werner Wenning, was involved. One supervisory board member complains that the succession issue was never properly discussed within the full board. He says that during various meetings, the board "didn't find the time or didn't want to find the time" for the subject.
Big Shoes to Fill
Suddenly Ackermann seems irreplaceable. He is seen as an integrator who is equally respected among traditional bankers in Frankfurt and investment bankers in London. So far, he has managed to bridge the deep divides between these two groups.
Most of all, however, Ackermann is extolled as a man with unique political connections, whose advice is in demand the world over -- and who the German government is apparently loath to see go.
What an about-face. Not too long ago, Ackermann was Germany's bogeyman, the personification of the evil banker and an ice-cold capitalist lacking all political sensitivity.
His critics were quick to point out his past missteps. In 2005 Ackermann, a reserve officer in Switzerland's citizen army, announced billions in profits and the elimination of thousands of jobs in the same breath. In 2004, he drew fire for making a "V" for victory gesture during a trial over bonus payments to former executives of Mannesmann, the telecommunications giant that was taken over by Vodafone. He was a co-defendant in the trial in his capacity as a member of Mannesmann's supervisory board, which had approved the payments. And in the middle of the financial crisis, he said that he would be ashamed if his bank were forced to resort to a government bailout, a comment the German government took as an insult.
But Ackermann was also the first to propose a bailout fund for the financial industry. At the height of the financial crisis, he worked out a bailout package for the troubled mortgage lender Hypo Real Estate on a mobile phone with Chancellor Angela Merkel. He is invited to G-20 summits, and the new Brazilian president, Dilma Rousseff, apparently cleared her schedule to meet with him shortly after her inauguration. "For the bank and for Germany, it would be a blessing if he stayed," says one supervisory board member.
Jürgen Fitschen, the member of the management board responsible for the bank's German business and its global regional business, made it clear that he did not think it was a good idea for Ackermann to move to the supervisory board.
Both Ackermann and Börsig Have Been Damaged
The embarrassing fuss over Börsig's succession has harmed both Börsig and Ackermann. After all, Ackermann was also involved behind the scenes in the search for a successor, and he too neglected to come up with a timely solution together with Börsig.
It also irked some members of the management board that he had openly favored former Bundesbank President Weber, a professor with no practical banking experience. The right person can learn anything, Ackermann recently told the Sunday newspaper Welt am Sonntag, "but personality isn't something you can learn." Such statements are "not collegial," says one board member, noting that some interpreted this to mean that the bank lacks its own strong personalities.
In addition to Jain, Börsig favors Fitschen as co-CEO. Supporters of this solution praise the Hamburg native as competent and detached. But Fitschen, who turns 63 in September, could have trouble keeping up with the energetic Indian for more than a limited period of time.
The supervisory board's nominations committee met on Sunday and proposed Börsig's idea of replacing Ackermann with Jain and Fitschen. But Ackermann favors Hugo Bänziger, Deutsche's chief risk officer, as a co-CEO alongside Jain. The fact that the bank came through the financial crisis relatively well is partly attributed to Bänziger's caution.
As the representative of the bank's more stable areas of operations Rainer Neske, head of private and business clients, also stands a chance. With the investment banking business expected to become more challenging in the future, due to higher capital requirements, the expansion of his unit seems obligatory.
The full supervisory board is due to meet later this month to reach a decision. In the meantime, the internal campaigning will continue. Meanwhile, Ackermann has postponed his vacation, which he usually takes in July, until August.
Translated from the German by Christopher Sultan