[A-List] Germany: financial sector restructuring

["Michael Keaney" <michael.keaney@xxxxxx>]

'Gagging order' on Commerzbank executive
By Tony Major in Frankfurt
Financial Times; Nov 28, 2002

Mehmet Dalman, head of investment banking at Commerzbank, has been subjected
to a "gagging order" by fellow executives amid an increasingly bitter
boardroom battle over cost-cutting plans at Germany's third-biggest listed
bank.

Bankers said that all board members have been told to refrain from talking
to the media about the restructuring plans, following a period of infighting
that erupted earlier this month. However, insiders said the edict was
directed primarily towards Mr Dalman, who has mounted a vigorous defence of
the investment bank.

Commerzbank officials yesterday dismissed talk of boardroom tension. But one
bank insider said the battle had "now become very bitter and personal".

Some executives "are gunning for the investment bank", he added.

Commerzbank plans to cut 25 per cent of the 1,300 staff at its Commerzbank
Securities unit in a bid to trim losses generated by weak revenues and
rising loan-loss provisions.

But at an impromptu press gathering after the bank's results presentation,
Mr Dalman made clear he would defend his unit "inside and outside" the
boardroom.

He also insisted that "Germans could be fired as well as Brits" in a bid to
press the case for further cost cutting at the bank's German operations. The
investment bank has a large presence in London as well as smaller offices in
the US and Asia.

Bankers said his intervention was "an affront" to chairman Klaus-Peter
Müller, who is battling to trim the bank's bloated cost base. It also caused
resentment among senior board members responsible for staffing, and stirred
tension with corporate banking staff in Germany.

Commerzbank wants to integrate investment and corporate banking in Germany
in a bid to generate additional revenues from mid-cap corporate clients. It
has already pursued this approach in London, but progress to date in
Frankfurt has been slow. Some senior corporate bankers would prefer the
loss-making investment bank to be slimmed down further and restructured as a
small Frankfurt unit offering fewer products.

Mr Dalman, who said he enjoys a "good understanding" with Mr Müller, insists
the job cuts are not a prelude to closing down the investment bank.

He said Commerzbank Securities, built from scratch over the past five years,
could be reshaped "to make the most out of the bank's best client
relationships". He insisted he had Mr Müller's backing.

Mr Dalman also said the investment bank was close to break-even, but was
burdened by high allocated central costs which forced it into the red.

The row echoes the bitter infighting at rival Dresdner Bank, where
traditional corporate bankers resisted integration with the investment bank.