Breuer says Deutsche Bank must reinvent to compete
FRANKFURT, Germany (AP) – Rolf Breuer bowed out after five years as chief executive of Deutsche Bank on Wednesday with a message to his successor, Swiss investment banker Josef Ackermann, that Germany’s biggest bank needs to “reinvent itself” as it struggles to cut costs and become a global player. Breuer, 64, said cost-saving measures launched last year helped push up profit in this year’s first quarter, but in his last address as CEO to shareholders cautioned that more needs to be done to make it competitive in the global market.
“Our problem with costs is not just a question of saving and becoming more modest in our spending,” Breuer told the annual shareholders meeting. “It is much more about dismantling unnecessary complexities and restructuring.”
Along with cutting costs, Breuer said the bank should maintain its focus on its core businesses of investment banking and Swiss-style private banking, while shedding or consolidating other, less profitable sectors. “Deutsche Bank must reinvent itself in many directions if it wants to survive and be successful,” Breuer said. Like all of Germany’s big banks, Deutsche Bank has struggled with volatile financial markets, high costs and a slowing economy. It has already announced plans to lay off 9,200 of approximately 97,000 employees.
Breuer began steering Deutsche Bank toward the global stage, shifting its focus more toward U.S.-style investment banking, which now accounts for a major part of its earnings. He also saw the bank more than double its market value since he took over in 1997.
Breuer will retain influence, becoming the head of the supervisory board at Germany’s biggest bank after Ackermann officially takes charge Thursday. But the 54-year-old Ackermann already has made his presence felt since his appointment was announced in September 2000 – breaking with traditions in the German banking world by appointing an American-style panel to report directly to him.
The bank has rejected German media reports earlier this year that it was considering moving all or part of its headquarters to London from Frankfurt, but concerns remain over Ackermann’s intentions.
“We would like to remind you that you are the new chief executive officer of Deutsche Bank and not the Bank of England,” Klaus Nieding, a shareholder representative, said Wednesday. He said Breuer had done a good job over the past five years but “a few building sites” remain. Ackermann has said he wants to double Deutsche Bank’s stock price, which at 76.70 euros ($70.49) remains far below competitors such as HSBC or BNP Paribas although the German bank is the world’s fifth-largest with 1 trillion euros ($920 billion) in assets under management. The new executive committee of division heads he appointed earlier this year is aimed at enabling Ackermann to take tighter control and steer the bank out of a fragile position worsened by the sluggish state of the German economy.
In 2001 Deutsche Bank’s net profit plummeted to 167 million euros ($144 million) from 13.5 billion euros a year earlier. Its profit rose to 597 million euros ($531 million) in the first quarter of this year from 382 million euros last year.
Ackermann, who holds a doctorate in economics, had a long career at Credit Suisse, rising to board chairman at the Swiss bank in 1993.
He quit the post in 1996 and moved to Deutsche Bank, where he has led the corporate and institutional clients group, which focuses on corporate lending and securities trading.