Dresdner chief is first casualty of merger collapse

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The Independent Online

The collapse of the 30bn euro merger between Germany's Deutsche and Dresdner banks claimed its first casualty yesterday as Bernhard Walter, Dresdner's chief executive, announced that he is to leave the bank at the end of the month.

Explaining his decision to quit, Mr Walter said that while he still blamed Deutsche Bank for the merger's collapse, he believed he should take "political responsibility" for the development. "I identified myself with the project, because I saw it as a sensible and promising solution for our clients and shareholders and, in the middle and long term, for our staff." His replacement is Bernd Fahrholz, 52.

Mr Walter, who pulled the plug on the merger on Wednesday because of disagreements over the integration of Dresdner Kleinwort Benson, the City investment bank, had been in the job for little more than a year. His predecessor Jürgen Sarrazin resigned in 1998 after an investigation into allegations that the bank had helped customers to evade German taxes.

Investors are pressing for Rolf Breuer, Deutsche's chief executive, to follow Mr Walter's example and quit before he is pushed. Dr Breuer was given a rough ride at a presentation to analysts in Frankfurt yesterday, when he too was asked when he would resign.

Although Dr Breuer refused to rise to the bait, analysts present said the confidence of the normally ebullient Deutsche Bank chief executive had clearly been shaken by this week's events.

Bankers said that Allianz, the German insurer that had facilitated the merger deal, had managed to get Dr Breuer and Mr Walter to agree on a solution to the DKB problem on Monday night, only to have it vetoed by Josef Ackermann, Deutsche's head of investment banking, and Edson Mitchell, his mercurial head of capital markets.

With both banks getting a roasting in Germany from the media, politicians and investors alike, analysts said that it was only a matter of time before Dr Breuer too quit.

There was little sympathy in London yesterday for Mr Walter, whose decision to rally to the defence of DKB was seen as having come rather late in the day.

Despite all the talk of the champagne being cracked open at DKB on Wednesday night, senior staff at DKB say privately that the investment bankers have lost faith in Frankfurt. With Dresdner now clearly vulnerable to takeover, it will be hard to keep the investment bank together in its current state.

Henning Schulte-Noel, Allianz's chief executive, told reporters that the insurer still hoped it could pull off a retail deal with Deutsche Bank 24, the bank's retail arm. "We don't want to make decisions shooting from the hip. We want to think about this in all calm. We don't rule it out."