Dresdner Bank has become the big German financial institution to adopt the US model of a streamlined management as a way of winning back the confidence of the capital markets.
Dresdner Bank on Tuesday became the latest major German financial institution to announce that it is restructuring its management board as part of a large-scale reform program to combat a considerable decline in earnings and share price.
Dresdner said its supervisory board had approved the restructuring, which would include the formal appointment of Bernd Fahrholz as chief executive officer, scrapping his current title of "management-board speaker", as well as a reduction in the number of management board members to eight from nine.
This reflects a similar change at HVB, Germany's number-two banking group, where Chief Executive Albrecht Schmidt has also seen his position strengthened and the management board has been cut back to six members.
Meanwhile, at market leader Deutsche Bank, the designated chief executive, Josef Ackermann, has argued the case for a strong American-style CEO (Chief Executive Officer). And the restructuring at Dresdner, coming four months after the bank's takeover by insurer Allianz AG, very much echoes similar moves that have been introduced at Deutsche and at Commerzbank, the country's number-three banking group.
Dresdner, like its two rivals, will be bringing together its corporate clients and investment banking businesses. The aim of this move is to take advantage of companies' stronger orientation towards the capital market and to attract corporate clients from competitors.
This new Corporates and Markets segment will form one of the two pillars of Dresdner's business. The other will be Private and Small-Business Clients, to be headed by Andreas Georgi.
As part of the reform, Dresdner said the end of the year will see the departure of Gerhard Barth, board member with responsibility for technology, and Joachim von Harbou, the member responsible for corporate clients, who will head the supervisory board of new Eurohypo mortgage bank.
The possibility of von Harbou's departure had already been the subject of considerable speculation. As planned, Chief Financial Officer Bernd Voss will retire at the end of this year but will join the supervisory board. His replacement will be Klaus Rosenfeld, who is currently working on the integration of Dresdner into Allianz.
With their new management structures, the top German banks aim to introduce a clearer delineation of responsibilities at board level. "These institutions have to respond to pressure from the capital markets," said Edgar Klein at Deloitte Consulting. The major institutional investors, who are very much locked into the Anglo-US way of doing things, are bound to demand this kind of changes, he reasoned.
Globally, the trend is for a clear definition of the responsibility – expressed in strategic terms and in terms of earnings – assigned to each single board member, said Ludger Kübel-Sorger of the Boston Consulting Group.
Banking expert Ingo Wagner at AT Kearney points out that though a US-style management structure offers real advantages on the capital markets, German equity law imposes limits on the responsibility a chief executive can assume. Whereas a chief executive in the U.S. can take decisions alone, Germany continues to apply the collegiate principle, where a decisions has to be taken jointly by the entire management board.