On HSBC's recent reorginization | Marks & Spencer: Chairman Stuart Rose's tomatoes | Citigroup Chairman Sandy Weill's sweater
More on Anshu Jain
More on Josef Ackermann
More on Sandy Weill
More on Stuart Rose
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There have been a few investment
banking banana skins that augur ill.
In Italy, Ackermann's Deutsche seems
to have been dealing with all the wrong
people |
In February, Deutsche Bank chief executive Josef Ackermann announced excellent 2005 results: pre-tax profits of €6.4 billion, up more than 50%. Deutsche also achieved a 25% pre-tax return on equity. That’s good news for shareholders, especially as the shares creep towards the €100 mark.
But behind the headlines, is all hunky-dory? The main problem for Deutsche is that it has lost its identity. A decade ago “the Deutsche Bank”, as it was known, was Germany incarnate and we all knew what it stood for. Most of the revenues were made in Germany, the links with Germany’s leading industrial companies were incontrovertible and Germans ran the show.
Today it’s a different story – London is the centre of the firm’s investment banking operations and most of the money is made outside Germany. Revenues from the “homeland”, in relative terms, shrivelled to a mere 30% last year, with a concomitant decline in the influence of the good German burghers (although they’re trying to turn it round at home – see our interview with Jürgen Fitschen published in our April issue). Thousands of domestic jobs have been slashed and, let’s face it, the bank isn’t even run by a German any more – the urbane Ackermann is Swiss. In a way, we are talking “a tale of two cities”. Is this sustainable in the long term? It certainly has implications for the culture of the firm and once the culture of a firm becomes blurred, the rot tends to set in pretty quickly (remember Bankers Trust?).
“Deutsche has made it to the top in investment banking and is no longer tainted by its commercial banking origins,” a competitor notes. And according to the league tables, that’s more or less correct – even though the debt rankings still look best.
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| How will Jain’s aspirations be viewed in the German heartland? My hunch is he’s not the most popular bunny back home in Frankfurt’s Finanzplatz |
This brings us of course to Anshu Jain, the 43-year-old co-head of Deutsche’s corporate and investment bank. Opinion is divided as to whether the Indian-born Mr Jain is overweeningly arrogant or intrinsically admirable. There is no doubt that he is extremely ambitious and, my sources say, not the easiest person to work for. But perhaps that’s just because he’s so much brighter than the rest of us. One insider even describes Jain’s style of command as “management by terror”. Nevertheless, Jain’s operations (which basically boil down to fixed income and equities) are rumoured to contribute virtually half of Deutsche Bank’s profits. That makes him a very Grand High Pooh-Bah in the bank’s hierarchy.
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