Kirch Affair

As Nightmare Becomes Reality, Deutsche Bank Co-CEO and Former Execs Indicted

  • Why it matters

    Why it matters

    The indictment of Jürgen Fitschen further harms the reputation of Germany’s largest bank, which is already embroiled in a series of other legal disputes.

  • Facts


    • Jürgen Fitschen and Anschu Jain have been co-chief executives of Deutsche Bank since 2012.
    • State prosecutors in Munich this week indicted five current and former executive board members of Deutsche Bank. Mr. Fitschen is accused of failing to correct the statements of the bank’s former executives.
    • Deutsche Bank has said the charges are unfounded and will stand by Mr. Fitschen should the case go to trial.
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DB Fitschen Ackermann Breuer


It was a possibility executives at Germany’s largest bank had long been dreading: State prosecutors officially indicted co-chief executive Jürgen Fitschen and four former executives for obstruction of justice, further dragging out a decade-long saga between Deutsche Bank and the one-time media empire of Leo Kirch.

Market reaction to the indictment was muted. Shares fell only about 10 cents as news broke over the course of Tuesday to close at $32.88. Analysts link the drop to the fact that Deutsche Bank, already embroiled in a series of legal disputes ranging from manipulation of currency benchmarks to ignoring U.S. sanctions, has far bigger problems that can hurt its bottom line. The bank has set aside €2.2 billion for settling future legal disputes and is also in the middle of a restructuring process that will last at least until 2016.

Nevertheless, the case marks another knock to the bank’s image, which has already been tarnished. State prosecutors in Munich this week formally indicted Mr. Fitschen, former chief executives Josef Ackermann and Rolf Breuer, as well as former board members Clemens Börsig and Tessen von Heydebreck, according to Handelsblatt sources close to the case.

Munich-based judge Peter Noll will now have to decide whether to bring the matter before a court. Such a court case against five bank executives would be unique in German history. A decision by the judge could take months. Further indictments against other witnesses and Deutsche Bank lawyers also could be brought, sources said.

The case is also a heavy personal blow for Mr. Fitschen, who came to the helm in 2012 together with Anschu Jain, promising to clean up the bank’s reputation. Mr. Fitschen brought contacts and a focus on private banking that has complemented Mr. Jain’s expertise in investment banking.

Analysts said that should Mr. Fitschen be forced to resign, Mr. Jain would likely remain as the bank’s sole chief executive, but there is no such talk within the bank itself. Mr. Fitschen has vowed to fight the charges, and Deutsche Bank has pledged to stand behind its head should the process go to court. While it would not comment on the indictment directly, a spokesperson said the bank remains “convinced that the charges against Jürgen Fitschen will be proven unfounded.”

The case is a heavy personal blow for Mr. Fitschen, who came to the helm of Deutsche Bank together with Anschu Jain promising to clean up the bank’s reputation.

Still, the process could complicate matters for the CEO team if it takes up much of Mr. Fitschen’s time: “If it actually goes to court, this would be anything other than helpful for Deutsche Bank,” said Stefan Bongardt, an analyst with Independent Research in Frankfurt.

The indictment extends what has already been one of Germany’s most acrimonious court disputes. It all began when former Deutsche Bank chief executive Breuer in 2002 questioned in an interview whether media firm Kirch Group could pay its bills. Three months later the company filed for insolvency. Founder Leo Kirch suspected Mr. Breuer’s comments were pre-meditated as the bank was considering stock-dealings with his company, and he filed a claim for damages against Mr. Breuer and the Deutsche Bank.

The four former executives testified during the trial that there were no internal plans for doing business with Mr. Kirch’s empire. An investigation was launched into whether the executives have lied – this week’s indictments are the result. It doesn’t help their case that Deutsche Bank eventually settled earlier this year for €925 million ($1.24 billion) with the heirs of Mr. Kirch, who passed away in 2011.

As co-CEO, prosecutors say Mr. Fitschen had a responsibility to correct the statements of his fellow board members and Deutsche Bank’s lawyers if they were lying. While all five executives have denied the charges against them, the process does seem to have launched a period of soul-searching at the bank.

“The mistake made was to agree on one line of defense that said, ‘we never wanted to do business with Kirch.’ There was never any such decision, but neither was there a decision to do business with Kirch,” said one insider close to the bank’s supervisory board, which has been closely monitoring the case.

The case will be complicated for the judge to clear up after all these years. The unified stand of Deutsche Bank’s former executives is also beginning to show cracks. Deutsche Bank has even considered taking legal action against its former head Mr. Breuer to recover some of the settlement costs, according to Handelsblatt sources.

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