Former Deutsche Bank CEO Hilmar Kopper 'Money Needs Laws'
Part 2: 'I Used to Think the World Was Shaped By Love'
SPIEGEL: Today, for example, you can buy certificates from Commerzbank that speculate over the company's own demise
Kopper: and, in the same vein, you can also bet on the outcome of football games. But then it isn't called speculation but Toto. What's the difference?
SPIEGEL: In gambling, it isn't Wall Street gamblers who are holding out their hands, but the state ...
Kopper: ... and that automatically makes it good? In a free society, everyone can do as he pleases, which includes making bets or burning one's money.
SPIEGEL: Playing the lottery doesn't cause serious problems for a country, the way speculative bubbles and bank crises can.
Kopper: I agree. The bad thing was that in the case of the crisis that began in 2007, a few banks were gambling. In Germany it was mainly the state-owned banks. They shouldn't have. Hedge funds, on the other hand, couldn't care less what they bet on. All they care about is their profitability. But this doesn't have to apply in the future.
SPIEGEL: Deutsche Bank also had a flourishing proprietary trading business during the years of the crisis.
Kopper: It's been decreasing for years now. Its share of total volume is very small today and, technically speaking, often unavoidable.
SPIEGEL: You yourself once heralded the change in course for Deutsche Bank -- toward Anglo-American style investment banking. The bank is hooked on this business today.
Kopper: Deutsche Bank, with more than 28 million private customers worldwide, isn't hooked on anything. But, as an integrated business with major international customers, it is very important, even indispensible.
SPIEGEL: There has been much talk of casino capitalism in recent years. We think the comparison is a stretch ...
Kopper: ... and so do I ...
SPIEGEL: ... because a casino is a relatively respectable business with clear rules. These limits don't exist in the financial system.
Kopper: I agree with you completely. But regulation is needed to change this, and it makes the most sense for such regulation to apply to everyone, not just the Germans, the French or the British. And, above all, this regulation must also apply to an area that has been completely unregulated until now: hedge funds. We know neither what they do nor what they own. In contrast, banks are among the most regulated businesses that exist. Nevertheless, that wasn't enough to avert the crisis.
SPIEGEL: Do you even understand today's financial world anymore?
Kopper: Yes, in general. But not in terms of the details, that is, certain technical facets.
SPIEGEL: That could speak less against you than against the markets, which have attained an enormous degree of complexity in next to no time.
Kopper: It certainly attests to the tremendous acceleration of these markets. We can't keep up anymore. Today's traders are in their mid-twenties to early forties. After that, they're either burned out or fed up, because they've had enough.
SPIEGEL: It's a strange world.
Kopper: It's no different than the world of professional soccer. I see this without resentment.
SPIEGEL: In recent years, financial products have increasingly been sold that, in some cases, aren't even understood by those selling them.
Kopper: (Deutsche Bank CEO) Josef Ackermann said a clever thing: It would be nice if the banks would remind themselves that the threat to their reputation is worse than a lost deal. We held the same view in the past. We didn't want to touch certain deals, because they were too precarious, in terms of structure and image, even if we stood to make a lot of money with them. This boundary has shifted more and more. Nowadays you just get yourself the best lawyers, have expert opinions written and make sure you've covered all the legal bases.
SPIEGEL: So morality is an impediment in the financial industry, after all.
Kopper: Morality is always an impediment when it comes to competition and success. But this doesn't meant that isn't very important -- or ought to be -- especially in the financial sector. Money, as it happens, is a particularly precarious affair.
SPIEGEL: Haven't you ever been ashamed to be a banker?
Kopper: Yes, it's happened occasionally.
SPIEGEL: The hearings before the United States Congress are among the most interesting ways of accounting for the role banks played in the crisis. The tone used in many internal bank emails is particularly dismaying. There is much talk of cheating and taking advantage of people.
Kopper: I was also shocked. But I find the same tone everywhere nowadays, unfortunately. I think it has to do with the relative novelty of email as a medium. People say the stupidest things, and then they're surprised to see that their tirades and all that verbal nonsense remains stored on servers for eternity.
SPIEGEL: Is that the way bankers used to talk about their customers and competitors?
Kopper: Certainly not at the top. And as far as other levels go, no one recorded it. I wouldn't absolutely guarantee that disrespectful remarks were never made. But the tone has certainly become more malicious, brutal and hard-edged. People used to write letters to each other, letters in which no one would ever have misbehaved in these ways.
SPIEGEL: (Former Deutsche Bank Chairman) Alfred Herrhausen once said that the question is not whether banks have power, but what they do with it.
Kopper: That's correct.
SPIEGEL: So how does one convince the young generation to put profit into perspective and become aware of its own social responsibility?
Kopper: Most of them do that already. You are referring to a very small group of people in which the Ronaldos of the banking world are to be found.
SPIEGEL: This elite shapes the perception of your entire industry -- where money rules.
Kopper: I don't believe that. In my view, the biggest driving force behind these people, who are often still very young, is the desire to be a big player within their own niche. They are egged on by the recognition of their competitors. But the proportions also have to be set straight: When a bank begins to falter, it's far more often the case that the bad loans are to blame -- not some escapades on the part of young traders.
SPIEGEL: Why is the financial sector so appealing to many young people?
Kopper: Because it's a huge challenge. They have to prove themselves every day, as the smartest, best and fastest in a fast-paced market. They get up in the morning and have nothing -- no patents, no licenses. In other industries, someone might come up with a good invention and live on the proceeds for the next 10 years. Germany is full of such engineers and technicians. They're great people, but nowadays the smartest people seek their challenges in the financial sector.
SPIEGEL: This elite also included the 31-year-old London employee of the major Swiss bank UBS, who gambled away 2.3 billion in derivative transactions this summer.
Kopper: These kinds of people exist here and there. They make bad decisions, and then they hide their mistakes. You can't look into everyone's soul. No security system in the world can prevent someone from occasionally taking off.
SPIEGEL: You too can be accused of being out of touch with reality, but for a different reason. After Jürgen Schneider, the real estate magnate, had declared bankruptcy, you referred to the 50 million deutsche marks he owed tradespeople as "peanuts" ...
Kopper: ... I was merely referring to the American meaning of the term, which is "a relatively small amount of money." And it was, compared with the 5 billion Mr. Schneider had cheated out of his investors. You mustn't forget that the 50 million represented a voluntary payment by Deutsche Bank, which I didn't want to emphasize too strongly.
SPIEGEL: How long did it take to convince you to sit on a truck filled with peanuts for the ad campaign in the Frankfurter Allgemeine Zeitung newspaper?
Kopper: I was very enthusiastic when I received the request, simply because I liked the self-irony of the motif.
SPIEGEL: How close are people to normal life in the mahogany-paneled executive suites at Deutsche Bank in Frankfurt?
Kopper: Perhaps they have trouble operating the ticket machines on commuter trains. But otherwise, the differences between banking executives and normal people aren't that great. As a banker, you have no lack of opportunities to look into the human soul. This entire nation, the entire world, is ultimately running after money. The amount of influence money has on people has always fascinated me. You forget almost everything while in its shadow.
SPIEGEL: Have you lost illusions when it comes to your image of humanity?
Kopper: Completely. I used to think that the world was shaped by love. I'm sorry, but that's nonsense. It's shaped by money. Money, avarice and greed -- these are the three main constants. Why did retirees buy Lehman certificates? Because Aunt Anna said that she had something that was earning 4 percent interest, and suddenly everyone else wanted it. That's when reason is suspended and the herd mentality takes hold. In this context, it's still true that the higher the return, the greater the risk.
SPIEGEL: You're the third of the four children of a West Prussian farmer. Why did you become a banker in the first place?
Kopper: While playing bridge with his friends, my father said: The boy is finished with school, but there's no money to send him to college, because his big brother is already at the university. The bridge players agreed that I should do a bank apprenticeship, because it could never hurt. I really wanted to work in the real economy, and to do something more hands-on. Something to do with engineering. Well, okay.
SPIEGEL: In those days, a banker was still respected. In every village, he was part of the local elite consisting of doctors, teachers and ministers.
Kopper: There was a reason they were called "bank officials." They were needed and respected. But one mustn't forget that a banker is always at risk, the minute he lends money.
- Part 1: 'Money Needs Laws'
- Part 2: 'I Used to Think the World Was Shaped By Love'
- Part 3: 'The Market Is Merely a Mirror Being Held Up To' the Political Class