DEUTSCHE BANK Germany's Mr. Teflon

Despite years of crisis and a near-collapse last fall, Deutsche Bank chairman Paul Achleitner has won another term at the helm. How did he do it?
Quelle: dpa
I'm behind you, in a good way.
(Source: dpa)

Over the years, Paul Achleitner has been called many things, including a financial whizzkid, a banking intellectual, and a “destroyer of capital.” But since taking over Deutsche Bank in 2012, Mr. Achleitner has shown himself to be one thing above all: a survivor.

That trait was confirmed once again this week, as shareholders agreed to award the 60-year-old Austrian, a former Goldman Sachs executive, a second term as non-executive chairman of Deutsche Bank’s supervisory board. Given the turmoil the bank has found itself in recently, Mr. Achleitner must sometimes have wondered if he would see the day. In the end it wasn't even close: 95 percent of shareholders backed the chairman at their annual meeting Thursday.

The perfect storm that engulfed Germany’s biggest bank in recent years did not leave its chairman unscathed. There was a moment late last year, after speculation that Deutsche might need a state bailout, when it seemed as though he had lost the confidence of the bank’s largest investors. But he hung on, persisting through yet another crisis. “Somehow nothing seems to stick to him,” said a close associate of many years.

How does he do it? What is the secret of German banking’s Mr. Teflon?

The “Achleitner system” is a mixture of skill, good luck and careful planning. But these days, another element has entered the mix, an unaccustomed note of humility. Deutsche’s plans for global leadership – cooked up under former CEO Anshu Jain – are long gone. Today, more realistic, regional ambitions dominate in the bank’s Frankfurt headquarters. “We can certainly claim to be the best in Europe,” Mr. Achleitner said in an interview.

Yes. I’ve made mistakes in these years. For one thing, I though Deutsche Bank was more firmly anchored in Germany than it was. Paul Achleitner, chairman, Deutsche Bank

The chairman freely admits to past failings: “Yes. I’ve made mistakes in these years. For one thing, I thought Deutsche Bank was more firmly anchored in Germany than it was. And I underestimated the job of communication. At first I just thought people had to understand that what we were doing was right. Now I know that you have to explain yourself better in this role.” In his next term, he will look to do that better. Because the globetrotting banker from the Austrian provinces still has points to prove.

One ambition is to strengthen European banking, to protect it from the American giants, who have come to dominance since the financial crisis. Europe needs its own strong capital markets, he thinks: with post-Brexit London’s place uncertain, Deutsche Bank should still take a lead in investment banking. Maybe it can even teach Germans to think more fondly of high finance, he says. Even as non-executive chairman, Mr. Achleitner has the power to implement that vision: In Germany, the supervisory board oversees the work of the executive board. The latter run the show day-in and day-out, but the former has the power to hire and fire executives and dictate overall strategy.

Mr. Achleitner has had to field plenty of criticism for his role, both inside and outside the bank. He was too keen on harmony, some said, a weak decision-maker, not least in sticking too long with former co-CEOs Anshu Jain und Jürgen Fitschen, who came on board at the same time as him in 2012 but struggled to turn around the bank's mischievous culture since the financial crisis. “One of his big mistakes was trusting those two too much, as if he was part of a triumvirate, rather than the chair,” says a friend. A long-standing colleague puts it more strongly: “He acted like a CEO in disguise.”

He takes a quite different view, seeing himself as an outsider forced to take an active role. “I was the first real outsider appointed in the bank’s 147-year history. So I had to find a way in, talk to people, and get to know the bank.”

It was only a shareholder revolt in 2015 that made it clear the co-CEOs would have to go. By then, Mr. Achleitner had distanced himself sufficiently from their many scandals and controversies. While he had seemed to back them in public, behind the scenes he was working on a plan B. This would eventually see the entire senior management team replaced in May of that year, with the modest British-born banker John Cryan moving from the supervisory board to take on the difficult task of leading the wounded bank.

Though he clung to power, the question was widely asked: Is the Achleitner system part of the problem or the solution? Was he decisive enough? He makes no secret of his guiding motto: “If you have to bang the table, you’ve already lost.” But as the bank got into deeper trouble, his composure appeared like a possible weakness, rather than a strength. Was he more of an intriguer than a strategist?

Those questions reached something of a crescendo at last year's meeting. With a new management team in place, some shareholders were out for the supervisor's blood instead. Mr. Achleitner didn't help by throwing some aggressive punches of his own, especially in ousting the bank’s top lawyer, Georg Thoma, from the supervisory board. With Mr. Thoma pushing too hard for investigation into past scandals, Mr. Achleitner engineered his removal, apparently without hesitation.

Again, Mr. Achleitner wound up winning a vote of confidence, but this time with a reduced majority of 87 percent. Something over 95 percent is more like the norm: major investors prefer to sort out problems ahead of time, behind closed doors.

This year’s meeting went more smoothly, with most investors keen to put differences behind them. “In view of the massive construction work he inherited, we can be happy with him. And who else would have taken on the task?” said Hans-Christoph Hirt, from the influential British asset managers Hermes EOS, one of the bank's larger shareholders.

Ingo Speich, of German fund managers Union Investment, admires how Mr. Achleitner has used his contacts “to evolve the board with fresh ideas and people,” citing the appointment of Google’s head of security to the bank’s supervisory board. Even the bank’s staff praise the chairman’s open and fair communication, even if a new round of restructuring means 9,000 jobs – about one tenth of the workforce – are about to be lost. “He puts emphasis on listening to what comes out of the organization,” said Martina Klee, one of the workers’ representatives on the board.

Perhaps most importantly, Mr. Achleitner has never lost the support of the bank's biggest shareholders. Over the last year, Mr. Achleitner has enjoyed the crucial support of the Qatari ruling family, which owns almost 10 percent of the bank. China’s HNA, which in March became the bank’s largest shareholder, is also seen as highly supportive.

But this does not give the chairman free reign. He knows bank’s largest investors want leadership stability for one main reason: to bring an end to the crisis years, and usher in a return to growth. March’s €8 billion ($8.9 billion) capital raise, the bank's fourth since the financial crisis, should mark the beginning of a new era, they feel. Shareholders will be watching to see if he can still pull it off.

The board has to make clear to management that the time for tinkering with strategy is over. Decisive measures are needed. Hans-Christoph Hirt, executive director, Hermes EOS

But what drives the 61-year old chairman to keep going? Not money: he was a Goldman Sachs partner in 1999, when its flotation made him a wealthy man. A graduate of Harvard Business School, he is famously workaholic, even postponing his wedding for the sake of a deal. In fact, his marriage seems inseparable from his professional life – his wife, Ann-Kristin Achleitner, is a prominent economist with a seat on the board of several major German companies. Similarly, his friendships are inextricable from his legendary network, which extends from German boardrooms to Washington thinktanks to Silicon Valley.

After years of glittering success at Goldman Sachs, a move to insurer Allianz brought unfamiliar setbacks. Mr. Achleitner planned to orchestrate a merger between Deutsche Bank and Dresdner Bank, but the deal fell through. Allianz itself bought the smaller bank, at considerable long-term cost to its balance sheet. Then, on the eve of the 2008 financial crisis, Dresdener was sold to Commerzbank, which subsequently had to be bailed out by the German taxpayer. It was around then the nickname “capital destroyer” was pinned on Mr. Achleitner, once the golden boy. Even now, some critics condemn his close-knit network as a corrupt system of insider favors.

But Mr. Achleitner seems to have risen above it all, with five more years as Deutsche’s chairman to complete a happy ending to his career. Together, he and Mr. Cryan have successfully cleared numerous obstacles. A billion-dollar US lawsuit for misselling mortgaged-backed securities has been successfully settled. March’s capital hike went smoothly. Deutsche’s executive suite, so often the scene of dysfunctional squabbling, seems a picture of unity. And recent rumors of a rift with Mr. Cryan are firmly dismissed: “On all major themes, myself and John Cryan see absolutely eye to eye,” he says.

After the hard times, he looks forward to greater freedom: “I really don’t want to leave when the end of our restructuring is in sight. I am looking forward to a second term.” But if things really are to be enjoyable, he and Mr. Cryan must now deliver success. One Frankfurt banker put it quite bluntly: “If they don’t deliver, then at some point Mr. Achleitner will have used up his nine lives.”

 

Michael Maisch is the deputy chief of Handelsblatt's finance desk, based in Frankfurt, Germany's financial capital. Yasmin Osman is a financial editor with Handelsblatt's banking team in Frankfurt. Daniel Schäfer is head of Handelsblatt's finance pages and based in Frankfurt.  To contact the authors: [email protected], [email protected], [email protected]