Resignation Aimed to Protect Deutsche Bank
April 3, 2006
Deutsche Bank and Breuer are still fighting claims that Breuer's comments damaged Kirch Holding by questioning the firm's creditworthiness in 2002. Breuer was chief executive officer of Germany's largest bank at the time.
In January, Germany's highest court ruled Breuer's comments breached the bank's contractual duty of not having a negative effect on a customer's ability to receive credit from other sources. One of Kirch's media units had loans of over 700 million euros ($848 million).
"It's a shame that Kirch is the reason for his departure,'' Wolfgang Gerke, a professor of banking at the University of Nuremberg-Erlangen, told Bloomburg. "The remark he made wasn't new. Everyone knew it. It was on the edge of what one can say.''
Decision to protect Deutsche Bank
The 69-year-old's resignation may be a sign that the court case against him and the bank is reaching a head, as he admitted he stepped down "to relieve Deutsche Bank of further discussion regarding him personally," according to a Deutsche Bank statement released Sunday.
Kirch lawyer Peter Gauweiler, who along with other Kirch representatives, has long called for Breuer to step down, welcomed the announcement, telling the Associated Press he thought the move "was overdue." Kirch's lawyers said they anticipate receiving up to 1.5 billion euros in compensation should they win the case.
DAX reaches five-year high
Finance markets also greeted the change positively. Investment bank Merrill Lynch upgraded Deutsche Bank stocks to "buy" after Sunday's announcement that Chief Financial Officer Clemens Börsig would take over Breuer's position. Anthony Di Iorio will then become CFO and Hugo Bänziger will join the board as Chief Risk Officer, the bank announced.
"Investors are relying on Deutsche Bank being kept out of negative headlines after Breuer's resignation," a trader told Reuters.
Concerns from WestLB analyst Georg Kanders that the resignation could add fuel to the Kirch fire and scare away investors initially appeared unfounded. The German DAX index broke the 6,000-point mark for the first time in five years and Deutsche Bank stocks were up 0.8 percent to 94.98 when trading opened Monday.