Last row, second seat from the front, close to the wall of the Munich district court. That’s where Jürgen Fitschen, co-chief executive of Deutshce Bank, sits every Tuesday in the fraud trial against Germany's largest bank. And like so many Tuesdays before, he’s following the proceedings attentively, listening to accounts of a bygone era when Deutsche still wanted to be a cool, modern investment bank.
In front of Mr. Fitschen sits his predecessor, Josef (“Joe“) Ackermann, who led the bank for a decade until 2012. His head is bent down as though determined to devote the hours to meditation. In front of him sits another former chief executive, Rolf E. Breuer, arms crossed on the desk, scanning the room like a bull.
Occasionally, their facial expressions change abruptly when the two prosecutors reiterate old accusations that immediately elicit responses from their armada of attorneys.
They’ve gone through this ritual almost every Tuesday since last April, accused of misleading a German civil court about their alleged role in the 2002 bankruptcy of Kirch Media, a company run by the late Bavarian mogul Leo Kirch. It is easily the most high profile court case from thousands of lawsuits that Germany's largest bank has faced since the 2008 financial crisis.
Mr. Fitschen, who currently leads Deutsche Bank alongside John Cryan, had a good day in court this Tuesday. The German may yet get to enjoy his retirement in May without a court indictment hanging over his head.
I think all involved have an interest in this coming to an end. Peter Noll, Judge in Deutsche Bank Fraud Trial
In court on Tuesday, Judge Peter Noll used unusually direct words to express doubt about many of the prosecution’s accusations.
Witnesses including publisher Friede Springer and Mathias Döpfner, the head of the Springer publishing house, had refuted accusations against the defendants, said Mr. Noll, adding that he was surprised that the state prosecutors were tirelessly reiterating their charges.
In the trial, the former Deutsche Bank chief executives stand accused of lying on the stand during a civil lawsuit brought by Leo Kirch against Deutsche Bank. Mr. Fitschen never took the stand in that civil trial, which was settled in 2014, but he is charged with directing Deutsche Bank's lawyers to reject the lawsuit despite clear evidence to the contrary.
The judge's comments Tuesday mark the latest sign that the Munich trial will end in an acquittal, which would be a source of deep relief and satisfaction for Mr. Fitschen, 67, in the final months of a career at Deutsche that has spanned almost 30 years.
Such positive moments are rare for Deutsche Bank staff at the moment. A few days ago, the bank had to report a record loss of €6.7 billion, or $7.3 billion, for 2015, and the share price has slumped by more than 20 percent since the start of 2016. Employees are being hit by cutbacks and years of lawsuits have taken their toll on the bank’s image.
On Tuesday, Moody's downgraded Deutsche Bank's long-term debt to Baa1 from A3, with a negative outlook, citing near-term challenges of an aggressive new restructuring plan laid out by the bank last year. It said Mr. Cryan’s new strategy was still at an early stage and that the negative outlook mirrored high risks for creditors until the management gets to grips with the bank’s operational and legal problems. The weak profitability had “structural” causes, Moody’s said, warning that the bank was grappling with strong competition and low interest rates.
Mr. Fitschen, together with Mr. Cryan's predecessor, Anshu Jain, helped set out the strategy that the bank hopes will lead it back to profitability. But implementing that plan, which involves deep cutbacks to global operations and investment banking, will fall on Mr. Cryan's shoulders alone.
May 19, the day of the annual shareholders' meeting, will be Mr. Fitschen's last day at Deutsche Bank. When he goes, the bank will lose one of the last figureheads that had firmly anchored the bank in its German home market. Mr. Cryan, though he speaks German, is a British citizen who prefers spending time in London rather than Frankfurt.
Despite his imminent departure, Mr. Fitschen is far from being a lame duck, said one fellow banker. “For many clients, he’s still the most important and most trusted port of call. His departure will tear open a hole.”
The final weeks and months are proving hard for Mr. Fitschen. “It’s mainly his discipline that’s carrying him through,” said one confidant.
The stoic, northern German banker found the allegations hurled at him by the prosecutors in Munich to be defamatory. He refused an out-of-court settlement, including a fine. It would have left a stain on him.
The honorable banker — that was the role Mr. Ackermann had in mind for Mr. Fitschen when he brought him back to Frankfurt from Asia in 2004 to head the bank's German operations and to restore relations with German clients turned off by the bank’s international muscle-flexing. Ever since then he has been dutifully fulfilling the role as "Mr. Germany."
When he and investment banker Anshu Jain were appointed as co-chief executives in 2012, the two promised a wholesale change in the bank's culture. But an onslaught of lawsuits, regulatory investigations and record fines undermined that promise and the bank's profitability. For many investors, the co-heads spent too long trying to hold on to the model of a global universal bank. A strategic overhaul, unveiled in April, didn't go far enough for shareholders.
Just three years after taking the lead, in June of last year, Mr. Jain had to go. Mr. Fitschen would have liked to leave as well, but Supervisory Board Chairman Paul Achleitner persuaded him to stay on for a year to smooth the transition.
Embodying the old Deutsche Bank isn’t an easy existence for Mr. Fitschen. On Thursday, he will sit next to Mr. Cryan at a news conference on the bank's annual results. The co-heads will have to explain the biggest loss in Deutsche Bank’s history.
Mr. Cryan’s job is to be the tough new broom cleaning up years of mistakes. The last time he held a news conference in October, he criticized the bank's former leaders for announcing a series of strategies and targets over the last two decades but rarely following through. As he spoke, Mr. Fitschen sat next to him, stony-faced.
Officially, the two still share responsibility for managing the bank and they take turns running board meetings. But it’s clear that Mr. Cryan is firmly in charge.
The British CEO traveled to the World Economic Forum in Davos last week without Mr. Fitschen. "Mr. Germany," meanwhile, is on a farewell tour of his homeland, attending New Year receptions at major Deutsche Bank branches. He talks about Europe, about China, about market turmoil, and his colleagues applaud him.
Back in the Munich courtroom, Mr. Noll, the judge made clear that he wants to speed up the final phase of the trial. Could he attend two trial days a week rather than one, the judge asked Mr. Fitschen. “With great pleasure,” came the prompt reply.
And then the judge went further, warning prosecutors that if they submitted any more motions to take evidence after February 23, they could be accused of trying to drag out the proceedings.
At that, Mr. Fitschen’s attorney Hanns Feigen smiled. He and Mr. Fitschen listened with satisfaction as the judge concluded: “I think all involved have an interest in this coming to an end.”
Kerstin Leitel is Handelsblatt's financial correspondent based in Munich. Laura de la Motte is Handelsblatt's lead correspondent covering Deutsche Bank in Frankfurt. To contact the authors: [email protected] and [email protected]