Germany's biggest bank has extended chief executive Josef Ackermann's contract until 2010. The Swiss-born banker has been in the hot-seat since the Mannesmann trial and his decision to slash thousands of jobs.
Deutsche Bank puts its faith in Josef Ackermann despite criticism
Speculation over Ackermann's future was put to rest on Wednesday after the board of directors of Deutsche Bank announced it had decided to extend the 57-year-old's contract for another four years. The top banker, who faces a second trial in connection with Vodafone's 2000 takeover of Mannesmann, had expressed his desire to stay on at the helm. But given the recent bout of criticism directed at Ackermann, an extension of the contract, which originally lapsed in October, was anything but certain.
After shooting to the top of Germany's biggest bank in 2002, Ackermann's reputation in the business world was sharply whittled away following his involvement in the long-running Mannesmann affair. The Deutsche Bank chief and five other top executives are accused of charges of breach of fiduciary duty after they rubber-stamped multi-million-euro handshakes to managers at the end of the fierce Mannesmann-Vodafone takeover battle in 2000.
At the time, Ackermann had been a member of Mannesmann's supervisory board and was charged because of his role as a Mannesmann director, not for anything he did at Deutsche Bank. He has denied wrongdoing.
Tarnished by trial
In July 2004 a reprieve was in sight after Ackermann and the five other men were acquitted of breaking the law by approving a total 111.5 million Deutsch Marks (57 million euros, $68 million) in payouts for former Mannesmann executives. Then, in December 2005, the Federal Supreme Court overturned the initial acquital and ordered a retrial. Prosecutors say the defendants committed a breach of trust by awarding as bonuses money that belonged properly to the company and its shareholders.
From left: Josef Ackermann, former Mannesmann chief Klaus Esser, former IG-Metall (trade union) chief Klaus Zwickel and former Mannesmann board membber Joachim Funk.
The call for a retrial of the country's top executives has launched a debate about business ethics and cast a long shadow over Ackermann, Germany's best earning business chief. Nearly all Germany's political parties have called for Ackermann to step down from Deutsche Bank, at least until the case against him is closed.
Many inside the financial world regard the order for a retrial as the final nail in the coffin for Ackermann. Observers predicted that Ackermann's return to court would be unsupportable for Deutsche Bank's international standing.
Earlier this month, Ackermann defended his position at Deutsche Bank. He told Germany's leading Bild tabloid he had "been encouraged from many sides to hang tough and keep working" although the prospect of facing another trial was "uncomfortable."
Controversial business strategy
German poet Friedrich von Schiller in front of the 155 meter-high twin towers of Deutsche Bank Frankfurt
In addition to his involvement in the Mannesmann affair, the banker whose take-home pay was 6.2 million euros ($7.58) in 2004, has come under fire for slashing thousands jobs at a time when Deutsche Bank was turning in record profits and its international standing as a global investment bank was rapidly improving.
In 2005, the bank reported a net profit amounting to 3.8 billion euros, the highest level in five years. At the same time, its costs were reduced by some 900 million euros through restructuring, a good part of which came from cutting jobs.
A Deutsche Bank employee protests against job cuts on Feb. 14, 2005: "I'm a victim of Deutsche Bank's real estate cuts"
Since Ackermann took over the bank, more than 20,000 positions have been made redundant. In 2005 alone, the bank counted 63,427 employees compared to more than 65,000 a year earlier, the same period of time for which, the bank said it would pay an increased dividend to its shareholders.
Union leaders and politicians have criticized Ackermann for sacrificing jobs in favor of investors' interests. Accused of running Deutsche Bank according to Anglo-Saxon business models that puts shareholders' concerns first as opposed to those of the state and employees, Ackermann has said it is time Germany "wakes up" to the reality of the business world.