The head of Dresdner Bank announced his
resignation Thursday while Deutsche Bank's chairman clung to his
job despite a chorus of criticism over the embarrassing collapse of
their month-old deal to create one of the world's largest banks.
Dresdner chairman Bernhard Walter informed his supervisory board
of his intention to step down by the end of the month, the bank
said in a statement. Bernd Fahrholz, Dresdner's management board
member in charge of corporate customers and investment banking,
will replace him.
In the statement, Walter said "a historic chance was wasted"
with the merger's failure, but blamed Deutsche Bank for making a
"balanced integration" impossible.
Earlier Thursday, Deutsche Bank chairman Rolf-Ernst Breuer
insisted he would not step down and sought to defend himself
against criticism that he mishandled the $30 billion deal in a rush
"My colleagues and I were and still are convinced of the
value" the merger would have created, Breuer said, while
acknowledging that Deutsche had failed to convince customers,
employees and especially investors, who had sent the bank's stock
plunging over the past month.
Breuer and Walter were to be co-chief executive officers of the
new bank. Walter, 58, was to have a five-year contract, with
Breuer, 62, expected to retire in 2002.
In the wake of the collapsed talks, Breuer said he "can't rule
out" a hostile takeover bid for his own bank. But while rumors
were already floating that U.S.-based Citigroup could launch a
takeover offer for Dresdner, names of potential bidders for
Deutsche Bank, Germany's biggest, have yet to surface.
"They're still a huge bank," said Bridget Gandy, senior
director of financial institutions at Fitch IBCA in London.
"Deutsche is more likely to be predator than prey."
Dresdner Bank called off the deal Wednesday, accusing Deutsche
of violating the terms of their month-old agreement by trying to
sell off Dresdner's investment banking arm, Dresdner Kleinwort
But others noted the prospects for the merger had failed from
the start to impress investors, sending both banks' share prices
down more than 20 percent over the past month. While the deal would
have created a $1.2 trillion powerhouse, analysts said the banks
overlapped in too many areas to produce enough savings.
"The stock market had clearly given its verdict on the merger
plans of Deutsche and Dresdner banks in recent weeks and they
were right," said Rainer Bruederle, a leading member of the
pro-business Free Democrats in parliament.
The debacle raises "doubts, to put it mildly, about the ability
of some boards to make strategic judgments," he said.
Chancellor Gerhard Schroeder, who had supported the merger,
expressed dismay at the embarrassing collapse Wednesday night.
"I've seen more mature performances in the corporate sector," he
Investors initially applauded the news of the deal's
dissolution, pushing shares of both banks up more than 4 percent
Wednesday. But shares of both drifted downward Thursday, with
Deutsche Bank down 2.51 euros to 77.50 euros ($74.25) and Dresdner
down .87 euro to 48.13 euros ($46.10)
At a news conference Thursday to discuss Deutsche Bank's 1999
results, Breuer said Deutsche would not attempt a hostile takeover
of Dresdner and also isn't looking for another merger partner.
"Our earnings (performance) last year shows that we aren't
under any pressure," Breuer said.
Deutsche Bank said it posted 2.57 billion euros ($2.47 billion)
in net profit last year, up almost 50 percent from 1998, confirming
preliminary earnings data released in February.
Without providing an exact figure, Deutsche said Wednesday it
posted a 50 percent rise in pretax profit in the first quarter of
2000, but Breuer conceded Thursday it wouldn't be able to maintain
that growth over the full year.
Dresdner, Germany's No. 3 bank, makes a similar presentation on
Friday, and was expected to face questions about its future
strategy amid speculation that it had now become a takeover target.
Breuer said Deutsche would not be giving up its domestic retail
business, as had been foreseen under the merger. Insurance giant
Allianz, a major stakeholder in both banks, would have taken a
significant stake in Deutsche Bank 24 as a means of distributing
insurance under the merger plans.
Breuer all but ruled out the possibility that Deutsche Bank and
Dresdner Bank could cooperate on a smaller scale in the future.
"One should never say never, but this is most likely out" of the
question, Breuer said.
Before announcing the deal March 9, the two had held talks on a
partial merger of their retail activities talks which also broke
off suddenly last fall.
"When one gets engaged twice ... one's not likely to do it a
third time," Breuer said.