With speculation reviving over who will succeed Josef Ackermann as chief executive officer of Deutsche Bank AG, the company will have to decide how German the leader of Germany’s biggest bank must be.
The answer may reveal whether the 140-year-old Frankfurt- based institution embraces its role as a global investment bank that makes most of its money trading securities on international markets, or whether long-standing business and political ties to Germany remain paramount.
The rise of Anshu Jain to sole head of the investment bank last month put him in charge of more than 80 per cent of Deutsche Bank’s profit and reinforced his position as a frontrunner to become CEO. One catch: he was born in India and doesn’t speak German, a potential handicap for an executive who must negotiate the corridors of political power as well as global markets.
“Based on performance, Jain is the crown prince,” said Lutz Roehmeyer, who helps manage about $15 billion at Landesbank Berlin Investment in the German capital. “But Deutsche Bank has a split personality — a global investment bank being run out of London and a German lender with a very political role. Any successor’s key challenge will be bridging these two worlds.”
Deutsche Bank ducked the issue last year by extending Ackermann’s tenure for three years after the board failed to agree on a replacement. The Swiss-born Ackermann, rekindled speculation about succession in May when he told shareholders that he’s been holding “intensive” talks on the topic with supervisory board Chairman Clemens Boersig for months.
Bänziger, Krause, Neske
Chief Risk Officer Hugo Bänziger, a Swiss native who helped steer Deutsche Bank through the credit crisis without state aid, and Chief Financial Officer Stefan Krause, who joined from Munich-based carmaker Bayerische Motoren Werke AG in 2008, are currently Jain’s main rivals for the top job, said two people familiar with the matter who declined to be identified. Rainer Neske, the 45-year-old head of retail banking, is a less likely choice because he lacks investment-banking experience, they said.
Jain, Bänziger, Krause and Neske declined to comment for this article, as did Ackermann and Boersig, according to Deutsche Bank spokesman Ronald Weichert.
Jain, born in Jaipur, Rajasthan and educated in India and the US, joined Deutsche Bank 15 years ago from Merrill Lynch & Co, following his mentor Edson Mitchell. After the 47-year-old Mitchell died in a plane crash before Christmas in 2000, Jain took over as head of debt. He was picked to run the combined debt and equity sales and trading unit in 2004.
Fixed income expansion
Jain helped build Deutsche Bank into a fixed-income powerhouse, more than doubling debt sales and trading revenue between 2000 and 2009. After the investment bank reported a record loss in 2008, he cut assets at the trading unit by 47 per cent, reduced jobs by 25 per cent and scaled back proprietary trading. The division returned to profit in 2009 and generated 78 per cent of the bank’s pretax earnings in the first half of this year.
Jain and the bank have won accolades. Deutsche Bank was named “best global investment bank” by Euromoney magazine, an award he collected on July 8 in London, where he shared a table with Brady Dougan, the US-born chief executive of Zurich-based Credit Suisse Group AG and Vikram Pandit, the CEO of Citigroup Inc and a native of India.
Jain topped a list of the 100 most influential financial individuals in European capital markets by London-based business weekly and website Financial News last month, ahead of Ackermann, a past winner. Deutsche Bank became the first foreign bank to be ranked number one in US fixed-income trading by market share, ahead of JPMorgan Chase & Co and Barclays Plc, according to a survey by Greenwich Associates published this month.
