Deutsche Bank CEO in trouble

Oct. 22, 2008 at 4:50 PM
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BERLIN, Oct. 22 (UPI) -- One of Germany's top bankers has drawn the anger of the German government after indirectly criticizing its $680 billion bailout package.

Thomas Steg, deputy spokesman for Chancellor Angela Merkel, fired unusually harsh words in the direction of Deutsche Bank Chief Executive Officer Josef Ackermann.

The banker's comments were "alarming, incomprehensible, unacceptable," Steg said.

Ackermann had told German newsmagazine Der Spiegel he would be "ashamed" if his bank had to take advantage of the federal bailout program. The statement came only a few days after Ackermann called on the German government to draft exactly such a bailout program.

Analysts say Ackermann's statement increases the pressure on banks not to fall back on federal money and try to shoulder internal crises themselves -- which may lead to insolvencies.

Ackermann is using the situation "to create competitive advantages for his bank, and makes it harder for other banks to fall back on the offer," Norbert Roettgen, a senior lawmaker with Merkel's center-right Christian Democratic Union, said on a TV talk show.

The Deutsche Bank head a few days ago publicly abstained from his multimillion-dollar bonus as a result of the financial crisis.

On Tuesday BayernLB, a bank with state influence in Bavaria, said it would use roughly $7 billion in federal money to stem its crisis.

Taking federal money also means accepting significant power shifts to Berlin, as it would increase Berlin's say over a bank's equity capital and dividend strategy. It also would severely limit payments to managers at banks that fall back on the fund. A bank would agree to such power losses only if it is in very serious trouble, observers say.

Deutsche Bank is Germany's largest financial institution, with revenues of $87 billion in 2007 and 78,000 employees all over the world. Observers say the bank is one of the more stable in Europe when it comes to surviving the global financial crisis.

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