The World from Berlin 'In a Storm, Decent Captains Remain at the Helm'

Deutsche Bank has reported a first-quarter net profit of 1.2 billion euros and extended its CEO's contract by three years. Good news, right? Not according to some German commentators, who note that the company still remains vulnerable despite its apparent success.

It's not a common thing these days to hear good news from a bank, but Germany's largest, Deutsche Bank, provided just that on Tuesday when it announced €1.2 billion ($1.56 billion) in first-quarter net profits.

The bank attributed the positive results to strong trading and sales volumes in a number of areas, including foreign exchange, money market and interest rate trading.

"Once again, we demonstrated our strength, as we have consistently throughout this crisis," company CEO Josef Ackermann said in a statement, though he added that 2009 would still present the company with a number of challenges.

For a bank coming off 2008 with an annual loss of €3.9 billion , the report seemed like good news. Still, Deutsche Bank's stock dropped 6 percent after the announcement on Tuesday. Many analysts have predicted that the strong performance in debt sales and trading hides weak performances in a number of other units and are skeptical that the good figures will continue throughout the year.

On Monday, Deutsche Bank's board moved to extend Ackermann's contract for three years until 2013. He had widely been expected to step down in 2010. After taking the helm at Deutsche Bank in 1996, Ackermann pursued what some consider an overly aggressive Anglo-Saxon-style approach to investment banking that won him few friends among German politicians or the populace. He has also been criticized for opting to not take help from a bank-rescue fund  set up by the German government, as a number of the bank's domestic competitors have.

German commentators on Wednesday are unanimous in their worry that the rosy picture presented by this report is temporary at best and misleading at worst. They also agree that Deutsche Bank was forced to keep Ackermann at the helm primarily because no successor has been primed.

The center-left Süddeutsche Zeitung writes:

"Ackermann has become one of the most hated managers in Germany. He is the quintessential foe of those who have always had their doubts about capitalism. He has become the symbol of arrogance."

"People might damn him for the way he pursues profits, and people might see his goal of making pre-tax profits of 25 percent as mad. But the fact is that Deutsche Bank profits save the state from having to devote even further billions to bailout actions. Given the growing army of unemployed, it won't be long before the state finds that it needs to use these billions somewhere else."

"But Germans will never love -- or even like -- managers like Ackermann. Instead, they prefer to live under the quaint illusion that their country can have corporations with massive international presences with executives who hide in the shadows. Germans want companies that export 'Made in Germany' products to all corners of the world, but managers who don't attract any attention to themselves. Executives should be even more humble than others. Managers should create jobs, but they shoudn't say anything."

"Executives like Ackermann will continue to offend people. They will continue to be demonized. They'll have to live with it -- because that's how it is. And that's especially true for bankers because it was the financial industry that made such serious mistakes with its reckless business practices. Good numbers alone won't help them win over the Germans. In this crisis, it is not too much to expect a little self-criticism, particularly from the head of Deutsche Bank. The fact is that Ackermann's company was also part of a global system that caused the world's economy to totter. If Ackermann is ready for a little self-criticism, he could learn that profits are good, but they aren't everything."

The center-right Frankfurter Allgemeine Zeitung writes:

"Despite the positive first quarter results, Deutsche Bank hasn't achieved the impossible. The good results were mostly due to investment banking profits. That was the business unit that was the first to suffer during the crisis and the first to bounce back. But investment banking earnings are subject to considerable fluctuation, which might mean that the first quarter results will not last throughout the year. That's why the company's stock price went down on Tuesday, despite the fact that it has been going up at an above-average rate since February."

"The most startling Deutsche Bank news, though, was not the quarterly results but, rather, the extension of Ackermann's contract to 2013. Ackermann had often been heard saying that he would resign his post in the spring of 2010. The fact that Ackermann is staying on results from a short-term decision, which the large institutional shareholders apparently forced the bank to make. Ackermann commands a lot of respect in the global capital markets. There he enjoys the trust that the German public still denies him. But it also proves that the bank's leadership has not succeeded in building up a successor early enough who could placate both bank executives and the large shareholders."

"In the mid-term, there is also the question of whether Deutsche Bank will be able to remain independent. Despite all its successes, it is still not one of the world's top 20 banks. If a foreign company were to take it over, the German banking landscape would be predominantly populated by weaklings. And that is not a tantalizing possibility."

Conservative Die Welt writes:

"The criticism that Josef Ackermann is getting from many politicians borders on public brainwashing. Under his leadership, Deutsche Bank has so far been able to survive the disaster in the global financial markets. But then, of course, he gets beat up on some more for not having to ask for the government's help. Instead of being proud of or praising Ackermann, Berlin shows resentment and animosity. This can no longer be justified as reasonable. In fact, it shows that politicians have had their feelings hurt and that they don't have a complete grasp of the complete economic picture."

"As the results released Tuesday only reinforce, the fact is that Ackermann and his team of executives have really accomplished something big -- and they've done this not only for the bank, but also for the financial position of Germany as a whole. Even if the banking crisis is far from over, there's much evidence that indicates that Deutsche Bank has strengthened its position vis-à-vis its international competitors. And it has done so using business policies that don't force it to fear its peers worldwide. No one would care to imagine what the disaster would look like if Deutsche Bank had been led as laxly as some publicly owned state banks or American competitors."

The business daily Handelsblatt writes:

"Despite this good crisis-time performance, the future of Deutsche Bank is once again uncertain for a number of reasons. First, the condition of the markets has succeeded in prolonging for a number of years any resolution to the dogged question of who will succeed Ackermann in his post. Second, if the captain now remains on board, the world must accept this as a signal that the financial tsunami is far from over. In a storm, all decent captains remain at the helm. The third reason is the uncertainty of the stock traders. If you look a little more closely at the quarterly results published yesterday, what strikes you is not only Deutsche Bank's strengths, but also its vulnerability."

-- Josh Ward, 2:00 p.m. CEST
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