Deutsche Bank AG said Anshu Jain and Juergen Fitschen will become co-chief executive officers in 2012, ending more than two years of speculation over who would succeed Josef Ackermann at the helm of Germany’s largest bank.
Ackermann, 63, will step down at the next annual general meeting, a year before his contract expires, the Frankfurt-based bank said in a statement on Monday. Deutsche Bank plans for him to join the supervisory board and replace Clemens Boersig as chairman, the company said.
Jain, 48, an Indian origin who is based in London, rose in his 16-year tenure at Deutsche Bank from fixed-income salesman to the head of the corporate and investment bank, which put him in charge of more than 70 per cent of group revenue and made him a leading candidate to run the bank. Fitschen, 62, as CEO for Germany and the longest-serving Deutsche Bank employee on the board, is enmeshed in the country’s political and business affairs.
“Anshu Jain’s investment bank is still the principal profit driver at the bank and he was obviously the best candidate,” said Peter Thorne, a London-based analyst with Helvea who has a “neutral” recommendation on the stock. “It may be an issue that he doesn’t speak German and is based in London but that’s why they also named Fitschen. It’s a fantastic compromise.”
EARNINGS RISE
Deutsche Bank on Tuesday said second-quarter net income rose 3.3 per cent to euro 1.2 billion ($1.74 billion), helped by gains at the retail unit and investment banking. While the lender reiterated a goal on Tuesday of euro 10 billion in operating pretax profit this year, it said the European sovereign debt crisis will make it more difficult to reach the euro 6.4-billion target at its investment bank.
Deutsche Bank rose as much as two per cent in Frankfurt trading, and was up 14 cents, or 0.4 per cent, to euro 38.36 by 10.57 am. The shares fell two per cent this year, less than the 10 per cent decline in the 49-company Stoxx 600 Banks Index.
The CEO decision ends mounting speculation over the replacement for Ackermann.
, who turned the 141-year-old- institution into one of the world’s top five investment banks by fees and served as an informal adviser to Germany’s chancellor, Angela Merkel, during the credit crisis. Ackermann has run the bank since 2002.
‘TEMPORARY SOLUTION’
Pairing Jain, an investment banker, with Fitschen, is an attempt to balance Deutsche Bank’s dual roles: A global trading house that competes with the likes of Goldman Sachs Group Inc. and gets most of its revenue abroad, and a German institution with longstanding ties to the nation’s companies and political establishment.
“I think it’s a temporary solution,” Ralph Silva, an analyst at London-based Silva Research Network, told Linzie Janis on Bloomberg Television’s “Countdown” on Tuesday . “In history, there’s never been a bank that has been run by two people successfully. It can’t work.”
Deutsche Bank ducked the issue of succession in 2009 by extending Ackermann’s tenure until 2013 after the board failed to agree on a replacement.
Armin Niedermeier, a spokesman for Deutsche Bank, said the bank won’t make Ackermann, Fitschen or Jain available for interviews for this article.
The Swiss-born Ackermann helped steer the bank through the credit crunch following the collapse of Lehman Brothers Holdings Inc. without a state bailout. He counselled Merkel on the rescue of property lender Hypo Real Estate Holding AG in 2008, and stood beside Finance Minister Wolfgang Schaeuble on June 30 in Berlin to announce an agreement by banks and insurers to roll over Greek debt holdings.
STRICTER RULES
The new leadership will take over at a time of stricter rules on capital and liquidity that make it harder for banks to generate the returns they did before the financial crisis. The bank is also integrating acquisitions, including Deutsche Postbank AG, to cut its dependence on investment banking and raise pretax earnings from consumer lending, money management and transaction banking to 50 percent of the total from 29 percent in 2009.
Having the trio of Jain, Fitschen and Ackermann running the bank would help the company manage regulatory issues and macroeconomic risks, JPMorgan Cazenove analysts led by Kian Abouhossein said in a note yesterday, before the announcement.
