Deutsche Bank AG/Burning down the most powerful institution to the ground after the Deutsche Bundesbank and the Bundesverfassungsgericht in Germany

The senior Deutsche Bank management of the last two decades has failed Deutsche Bank AG, its Deutschbanker and Deutschland as a whole

What we are witnessing is nothing less than the total destruction of a German icon, which rose from the aches of the Third Reich under Hermann-Josef Abs, broken into regional parts by the Allied High Commission after the war to assure that centralized power in Germany would never, ever again threaten the peace in Europe.

This damage to Deutsche Bank AG was nothing compared to the self-inflected wounds, which the Vorstand and Aufsichtsrat gave the bank with numerous, continuous Fehlentscheidungen from 1994 to present.

The RAF actually succeeded in striking at the heart of the Bundesrepublik Deutschland in that it assassinated Dr. Alfred Herrhausen. Thereafter, Stuckwerk was the name of the game at Deutsche Bank.

Dr, Horst Burgand, Kreditvorstnad, was perhaps the last man on board with down-to-earth common sense and a Deutsche Bank traditionalist, but he was ill and could not assume command of Deutsche Bank AG after the untimely death of Dr. Herrhausen.

Hilmar Kopper, a decent and down to earth man with uncommon sense, had to pick up the pieces, immediately after the death of Dr. Herrhausen.

Deutsche Bank AG had just completed the purchase of Morgan Grenfell Group plc, the number 1 UK Corporate Finance and Institutional Asset Management powerhouse in Great Britain, a member of the 4 top UK managers of UK pension fund assets as well as a major player in the US institutional asset management business, for STG 2.6 billion in November 1989. 

In 1996, the Peter Young Affair = in the Morgan Grenfell Asset Management unit (MGAM) under Michael Dobson - bankrupted Morgan Grenfell Group plc.

It was recapitalized by Deutsche Bank AG and resulted in a USD 1 billion loss in a "riskless" business, the result of a complete and utter failure of Morgan Grenfell Group Compliance. The whole team had to be fired.

Where was Michael Dobson?

He was certainly not a worthy successor to Sir John A. Craven.

Sir John A. Craven joined the Board of Managing Directors of Deutsche Bank AG in November 1989, while remaining Chairman of Morgan Grenfell, more than a full plate for the chief salesman for MG worldwide, a non-German-speaker, who could only be in Frankfurt = at best - once a week for the Tuesday Vorstandssitzung (VS).

He mastered the task exceeding well in partnership with Hilmar Kopper, Vorstandssprecher  and Dr. Rolf-E. Breuer, Wertpapiervorstand, in charge of the global securities business, asset management and research activities of the bank in Frnakfurt, London (DB London/DBCM), NY (DB NY/C.J. Lawrence), Tokyo (DB Tokyo/DBCM), Singapore and Australian (Bain & Co.).

The Board of Managing Directors made following key, deadly mistakes:

1. Betraying the Corporate Culture of the institution,

2. Hiring talented, foreign bankers only driven by ego, power and money,

3. Firing two generations of loyal senior (Stv. Direktoren und Volldirektoren) Deutschbanker. Nobody on the Vorstand was dismissed. This should have happened,

4. Forgetting to establish (underestimating the key protective and corrective impact of) a powerful Compliance unit in Frankfurt HQ,

5. Allowing Joe Ackermann to assume power (absolute power usually corrupts absolutely - and it did in this case -,

6. Gutting the Credit, Risk Management, Legal and Treasury control functions in Frankfurt HQ and transferring power to London and NY,

7. Taking no real corrective action after it was clear that everything was getting completely out of control.

8. Allowing Joe Ackermann to pick his own successor (s) which he failed to do, and the final process was then criminally mismanaged in the ultimate jackass choice of Ansu Jain and Jurgen Fitchen ( a really decent and dedicated Deutschbanker) to assume joint power,

10. Allowing Deutsche Bank to drift from one disaster to another under this team.

In sum, der Fisch stinkt IMMER am Kopf zuerst.

We are now witness a business desaster recovery program with John Cyran at the helm. All he can do is fight fires, one after another, and he is doing an excellent job with the cards he has been dealt.

Will it be too little to late?

This is still very much an open question.

The jury is still out, kommt Zeit, kommt Rat.

Deutsche Bank AG is living the death spiral that engulfed Commerzbank AG over the last few years - do a capital raise, waterdown the stock of current holders, coax new investors on board and write off then the entire capital increase to cover past mistakes.

This process is not yet over.

When the stock falls below EUR 10 after the next writedown of Level 3 assets, legal expenses and the coming serious recession, buy the stock and hold on for the rise of the phoenix from the ashes.

Deutsche Bank AG will survive and return to past glory, but it will still be a long and hard row.

Have faith.

Die Zeit heilt alle Wunden.

Rondal Eric Powell, ehemaliges Kind der Deutschen Bank, Managing Partner, REP Consulting with offices in Frankfurt, Germany and Vero Beach, Florida