Kleinwort chief resigns in row over future strategy

Leonhard Fischer, chief executive of Dresdner Kleinwort Wasserstein, yesterday resigned suddenly from the investment bank, prompting fears it might be put up for sale by its German parent Allianz.

Dresdner bank issued a statement after Mr Fischer's abrupt move, admitting it had been brought about by "differing opinions over the corporates and markets division".

Mr Fischer, 39, is understood to have clashed with other senior managers within Dresdner over his handling of the reform of DrKW, which has involved reducing its headcount by 1,000 since July.

Mr Fischer, who leaves at the end of October, will be replaced by Bernd Fahrholz, chairman of Dresdner. Mr Fahrholz is expected to be more diplomatic in his handling of staff, especially in Germany where redundancy programmes are more difficult to implement than in the UK and US.

The removal of Mr Fischer from the top job at DrKW will refresh speculation that the German insurer Allianz is keen to sell the investment bank after it lost more than €1bn (£625m) in the first half of this year. DrKW has already been forced to implement 1,000 job cuts since July as part of a wider programme to reduce Dresdner's headcount by 3,000.

The importance of the investment bank to Allianz appears to have been further undermined by Mr Fischer's departure, because his seat on the board of the insurer will not be replaced by another representative of DrKW.

Mr Fischer is the latest in a spate of senior US and European banking industry executives to resign in recent weeks, including Credit Suisse's Lukas Mühlemann and Tom Davis, vice-chairman of Merrill Lynch.

Allianz reiterated its commitment to retain DrKW and said it would persist with its plan announced in July of reducing costs to cope with falling revenues.

Allianz is thought to be ready to sell DrKW if it could agree an acceptable price. But in common with other financial institutions with subsidiaries they want to hive off, it has not been able to because of the depressed market conditions.

Instead senior Dresdner employees have decided at a board meeting yesterday to press ahead with radically reforming the business to try to make bits of it profitable.

Dresdner is expected to announce today a plan to set up a "work out unit" – a model pursued by other distressed banks. Allianz is thought to be planning to inject extra capital into some areas of its business while taking other underperforming parts of its loan book and repackaging them before selling them.

Allianz bought Dresdner last year. Dresdner snapped up its investment banking arm from Bruce Wasserstein for $1.6bn (£1.06bn) two years ago, when markets were near their peak.

Mr Fischer oversaw this purchase. Mr Wasserstein left last November, taking with him half a dozen senior bankers to its rival Lazard. Before joining Dresdner in 1995, Mr Fischer worked at JP Morgan.