Deutsche Bank is in tatters – today. But a renowned business consultant claims former CEO Josef Ackermann performed magnificently during his time at the German giant.
Why flog a dead horse? Why would you kick Deutsche Bank given its abysmal condition – after all, it is was one of the biggest success stories of the German «Wirtschaftswunder».
Roland Berger, a well-known banking consultant, put pen to paper for «Frankfurter Allgemeine Zeitung» (behind paywall) to present his intrepretation of what happened in Mainhatten.
Laudable Management Performance
He didn't mince his words: the past 25 years of investment banking at Deutsche are to be lauded, not criticized. Josef Ackermann, the former Swiss CEO of the bank, deserves all praise for creating the third-biggest investment bank in the world, Berger says: «a management performance deserving of highest praise.»
According to this reading, the current predicament of Deutsche Bank has nothing to do with strategy and activities of investment banking, but is due to entirely different reasons. The consultant is mum about which these reasons might be.
High-Risk Banking
While bank managers across the world – including John Cryan, the current CEO of Deutsche – take an increasingly critical view of investment banking, Berger is clearly not bothered and seems to make a case for high-risk banking.
The reason for entering the U.S.-dominated capital-market business 25 years ago? A strategic necessity, because the traditional credit business sagged, Berger says. The same reason was given by the Swiss rivals of Deutsche for doing the same.
Misdemeanors? The Others Did Worse
The misdeeds, breaking of rules and worse which led to fines amounting to billions of dollars? Unacceptable of course, just as excessive bonus payments, Berger wrote, adding that the bank did nothing that others didn't.
And that's exactly the argument used by Swiss big bank CEOs for a long time: the behavior of others was worse.
Two Men Who Know Each Other
And obviously, the argument about the profitability of investment banking also gets a mentioning, a line of argumentation that disregards the fact that ordinary shareholders got very little indeed while traders and managers such as Ackermann were lavishly compensated.
The paean doesn't come as much of a surprise: Berger and Ackermann have been close for years. Waxing lyrical about the performance of Deutsche is thus pretty much an exercise in improving his own reputation.
