Deutsche Bank's Shake-Up Begins

Brash and flexible are two things that German banking, generally speaking, is not.

But Josef Ackermann, the investment banker tipped to take unprecedented executive control of Deutsche Bank in May, is not German, rather Swiss. That’s a different banking tradition altogether.

Ackermann’s schooling in corporate and investment banking with Credit Suisse in New York and London – prior to his 1996 move to run Deutsche Bank's 9,000-strong investment banking unit in London – made him a major player in the field of flexible "universal" banking that now dominates the international investment scene.

As the first non-German ever to run Deutsche Bank, he will take control of a newly created executive committee in what observers describe as a radical management shake-up.

New team emerging

That shake-up began Wednesday, as the bank's intractable old guard, which has grumbled not so quietly about the changes, suffered its first casualty.

Thomas R. Fischer, a member of the board of managing directors, was released from his contract by Deutsche Bank’s supervisory board, which cited "divergent opinions on the bank’s new management structure."

In the move, Ackermann himself took over provisional control of the bank’s treasury, while Hermann-Josef Lamberti became chief operating officer and Clemens Börsig won provisional control of risk management.

The shake-up also rattled the bank’s Group Board as two members, Jürgen Fitschen and Michael Philipp, left their posts to become "global business heads" with direct responsibility in the Group Divisions Corporate and Investment Bank (CIB) and Private Clients and Asset Management (PCAM).

Internal coup

Ackermann’s ascent is, in some respects, a coup for Deutsche Bank’s investment banking team. The London team of Wall Street-style bankers has become the bank’s top source of profits during his tenure, even as other parts of the institution were sometimes seen to struggle.

The bank’s shares on the Frankfurt exchange have followed world trends while Ackermann was in London, rising through the past half-decade, with the exception of steep dips in value in third quarter 1998 and a gradual slump during 2001 that worsened after September 11.

Yet the investment banking team was critical of Deutsche Bank’s Frankfurt-based management last year, which it viewed as insufficiently responsive to worsening market conditions.

If brash and flexible is what the London team wants, it is now likely to get it. But the question remains whether "Anglo-American" style management under Ackermann – a former artillery officer in the Swiss Army who will have powers similar to that of chief executive officer – will serve Deutsche Bank’s interests in the long term.

More tremors to come?

The shake-up may yield more casualties – perhaps, like Fischer, veterans of Germany’s solid banking sector, and perhaps Deutsche Bank’s business culture in general.

Stability has been seen as a particularly strong virtue in the German banking sector, and it has at times paid off handsomely.

Flexibility, meanwhile, has served Anglo-American banks well, so long as they are not perceived to lack stability.

Ackermann’s formidable task is to find a balance between the two virtues, lest either run to excess.