12 August, 2020

Deutsche Bank co-CEO Fitschen goes on trial in Kirch case

MUNICH (Reuters) – Deutsche Bank (DBKGn.DE) co-CEO Juergen Fitschen went on trial on Tuesday accused of giving misleading evidence in connection with the 2002 collapse of the Kirch media empire, a case that could prove a distraction for the bank as it presses ahead with a strategic overhaul.

Fitschen, 66, has vowed to fight the criminal allegations, which follow a civil suit brought by heirs of late media magnate Leo Kirch. He faces a maximum sentence of 10 years in prison.

The trial started a day after Fitschen and co-CEO Anshu Jain unveiled a long-awaited revamp that foresees a paring back of Deutsche’s investment bank and the sale of its Postbank retail division via a stock market listing.

Fitschen and his co-defendants, including former Deutsche CEOs Josef Ackermann and Rolf Breuer, are obliged to attend weekly hearings that are due to run at least until September.

“It’s very difficult and highly unfortunate timing for the bank,” said Christopher Wheeler of Atlantic Equities.

At the start of the trial, in the same Munich court where Formula One boss Bernie Ecclestone and a neo-Nazi murder cell were tried in recent years, prosecutor Christiane Serini said Fitschen and his co-defendants had misled an appeals court in order to avoid paying damages sought by Kirch.

All five have denied the charges.

“Fitschen offered vague and inconclusive evidence at his hearing,” Serini told the court, packed with five judges, a phalanx of lawyers and dozens of reporters.

Fitschen leafed through documents as the charges were read out but did not speak to the court.

“Mr. Fitschen will answer the complaint and explain that the charges made against him are unfounded,” his lawyer Hanns Feigen said in his opening statement.

“Please understand that Mr Fitschen will answer questions posed by the court but under no circumstances will he answer questions posed by the prosecution, said Feigen, who has defended other high-profile figures including Bayern Munich president Uli Hoeness and Porsche boss Wendelin Wiedeking.

After 12 years of legal wrangling, Deutsche Bank settled the civil suit in February 2014 in a deal that cost the bank about 925 million euros ($1 billion).

Fitschen has rejected an offer from the prosecutor to settle his case out of court with a fine, sources say. On Monday he said: “I don’t know why I’m being charged”.


Deutsche Bank shares fell over 4 percent on Monday and were down nearly that amount on Tuesday as investors worried that the overhaul plans were not ambitious enough and questioned the lack detail.

Fitschen is not only co-CEO of Germany’s flagship bank but is head of the banking lobby BdB, a high-profile position that puts him in close contact with regulators and policymakers.

In addition to Fitschen, Ackermann and Breuer, two former management board members of Deutsche, Clemens Boersig and Tessen von Heydebreck, are on trial.

Fitschen and Jain took over as co-CEOs in 2012 and their tenure has been marked by weak returns and a share price that has trailed rivals. The bank has been dogged by legal woes, including investigations into possible manipulation of benchmark currency rates and dealings with Iran.

After initially sticking with an expensive universal banking model, the duo have reined in their ambitions and worked to trim Deutsche’s operations.

In the dual-CEO structure, Fitschen would normally take the lead in selling the new strategy to a skeptical audience. But the trial could put pressure on Jain to take a more active role.

“The trial adds another layer of pressure on the current management who are already under pressure from the restructuring plan,” said a European equity analyst who declined to be named. “They have zero scope for failure.”

Leo Kirch, who died in 2011, blamed Breuer for triggering his group’s downfall by questioning its creditworthiness in a 2002 television interview. For years, Kirch sought to recoup about 2 billion euros ($2.7 billion) in damages

Deutsche Bank said on Tuesday it was “convinced that any suspicion against Juergen Fitschen will be shown to be unfounded.”