Dialog International

Germany Falling Behind in New Digital Economy

Much handwringing in the executive suites across Germany when the recent list of the most valuable publicly traded enterprises in the world was recently published. In Europe's strongest economy only TWO companies - SAP and Siemens - made it into the Top 100 list based on market capitalization: SAP worth $165 billion placed #50 and Siemens just made the cut at #99 with $112 billion market value.  Once again, American technology companies were dominant, with several Chinese companies in the mix: 

„Die Top-US-Konzerne sind derzeit in vielen Branchen das Maß der Dinge. Sie profitieren vom großen und prosperierenden Heimatmarkt und von der hervorragenden Entwicklung der US-Technologiekonzerne. Dem hat Europa zurzeit wenig entgegenzusetzen“, sagte Alexander Kron, Mitglied der Geschäftsführung bei EY, WELT bereits im Sommer. „Das Wirtschaftswachstum schwächelt, viele europäische Unternehmen leiden unter dem US-chinesischen Handelsstreit, zahlreiche Konzerne befinden sich in tief greifenden Umbruchphasen.“

And what about the cornerstone of German economic power - its much vaunted automotive industry? The US company Tesla beats out both BMW and Daimler by more than $20 billion in market value, and is quickly narrowing the gap with Volkswagen.  Tesla recently announced its plans to build a "Giga Plant" outside Berlin, creating 8,000 new jobs initially just as Audi announced massive layoffs: 

"Ironically, the industry ended up weaker for Germany’s protectionist politics within the union, experts say. Under the lax European Union carbon dioxide caps, German car builders had little incentive to modernize their fleets. So while they kept on building and selling tank-like vehicles, companies like Tesla developed rapidly, leaving Germany behind both technologically and in securing markets. Part of the big job cuts the industry is facing now can be attributed to this failure.

Instead of just building cleaner cars, German carmakers took to cheating, destroying the image of the honest German merchant and engineer. Over the past few years, Germans have had to learn that Volkswagen and other German carmakers were involved in developing and deploying software that activated controls on nitrogen oxide emissions during testing only, while real-world emissions were much higher"

Why has the Digital Revolution largely passed Germany by? Partly due to complacency - the belief that dominance in automotive and machine tools would persist.  Much of the domestic engineering talent gravitated to these sectors.  Then there is the lack of a strong start-up culture in Germany.  Many (most?) start-ups fail, and failure traditionally has been frowned upon in German business culture.  Most importantly, perhaps, is the dearth of venture capital.  Backed by pension funds, university endowments, foundations, etc, US venture capital firms can deploy $billions to quickly scale software platforms across multiple geographies - quickly minting "unicorns", i.e. start-ups with at least $1 billion in valuation.  Many of the new digital enterprises in Germany have been "me -too" knock-offs of US companies - Zolando and Xing come to mind.  They have had some success in the German or wider EU market, but lack the global reach of an Amazon or LinkedIn.  That's not so say a well-managed knock-off cannot compete:  Germany's Hello Fresh has surpassed Blue Apron in market share for meal-kits in the US, although I have doubts that Hello Fresh can sustain this growth once Amazon enters the meal-kit market. 

For too long, German industry relied on banks for capital.  And Germany's economic weakness as we enter a new decade is in part due to the weakness of its banking sector.  Just one depressing data point:  in 2007 Deutsche Bank's market value (US$75 billion) was roughly half that of JP MorganChase.  Today, at US$16 billion DB is worth 1/27th of its American rival JP MorganChase. 

 

Wirecard AG: Golden Investment Opportunity or Massive Fraud?

One stock I have been following for some time is the global payments company Wirecard AG.  The company has shown impressive year-over-year growth in both revenue and profit, and until this year made investors very happy.  I personally had a positive experience with Wirecard having received its pre-paid debit cards issued on behalf of blue chip American companies.  Both customer and partner growth globally has accelerated.  So why haven't I pulled the trigger and taken a position in this growth stock?  For one thing, Wirecard's business model is difficult to understand.  Here is how the company describes itself:  

"Wirecard is one of the world’s leading independent providers of outsourcing and white label solutions for electronic payment transactions. The Wirecard Group has been supporting companies in accepting electronic payments from all sales channels. A global multi-channel platform bundles international payment acceptances and methods, supplemented by fraud prevention solutions. When it comes to issuing their own payment instruments in the form of cards or mobile payment solutions, Wirecard provides companies with an end-to-end infrastructure, including the requisite licenses for card and account products."

Acting as middleman for global payments brings to mind criminal enterprises and money laundering.  And, in fact, the company has its roots in doing business with gambling operations and porno sites.  Marcus Braun, the Austrian computer scientist who took control in 2002 and now owns more than 7% of the outstanding shares has done much to clean up the act and expand the services offering. 

But then there is the bizarre feud with the Financial Times.  On two occasions this year, the FT published reports that Wirecard had wildly inflated revenue numbers of two subsidiaries.  Wirecard forcefully denied the allegations of fraud and apparently retaliated with spying on the venerable London paper.  In any case, both times several large institutional investors dumped their shares and the price plummeted.  Wirecard shares (traded on the German exchanges and the OTC market in the US) have since recovered as the company continues to post positive results.

But can we believe the numbers?  Markus Braun has brought in KPMG to audit the subsidiaries in question, and that apparently reassures at least some investors:

The stellar fundamentals Wirecard is posting and is expecting are meaningless to investors as the market is wondering if these are actually too good to be true. A final verdict is not possible for an outsider and only a comprehensive and sophisticated external audit may help to eliminate all that uncertainty and doubt. Meanwhile, I am also torn between buying, selling or simply holding my stock and by giving management and the auditors the benefit of the doubt I see Wirecard as a "wait and hold" while at the same time remaining amazed about all the wonderful partnerships Wirecard is announcing almost every month which seem to play little or no role whatsoever right now.

My own position is "wait and see."  KPMG is an excellent firm, but if the management of its clients is intent on committing fraud an audit will not expose this.  I think back another high-flying company  - Enron - which also had an opaque network of subsidiaries and partners.  The massive fraud eventually destroyed its auditing firm - Arthur Anderson.  I myself was an eyewitness to the 1994 Balsam AG scandal, in which banks and investors lost over $2 billion.  In that case, Price Waterhouse Germany signed off on fraudulent accounts receiveables generated by Balsam management. 

Negative Interest Rates and German Savers

The European Central Bank is now charging  negative interest rates- currently at -0.4%. - on its debt instruments. Why would an investor pay an institution to hold its cash at a negative return? Cutting interest rates was initially used as a stimulus to investment and employment across Europe.  But now there does not seem to an end to the downward spiral.  This poses a dilemma for the typical German saver, who typically shuns equities for the "safety" of government bonds and bank savings accounts: 

"Auch die Kapitaleinkommen der privaten Anleger sind erheblich vom Zinsniveau abhängig. Vom Geldvermögen von mehr als 6 Billionen Euro werden etwa drei Viertel in Form von Bargeld, Bankguthaben, Anleihen sowie überwiegend in Anleihen investierten Versicherungen gehalten. Der Aktienanteil beträgt nur rund 6 Prozent."

One would think a rational investor would change his/her behavior in the face of ruinous yields and at least diversify an investment portfolio with stocks.  But that doesn't seem to be happening.  German savers are stubbornly risk-adverse. 

While retail investors are primarily "buy-and-hold" savers - in for the long haul, many institutional investors are active traders, which is now leading to a dangerous spike in bond prices:

  Die Kurse von Bundesanleihen und anderen Staatsschuldtiteln schießen kräftig in die Höhe, die Kurscharts erinnern fast schon an heiße Technologiewerte. Und so kommt es zu dem Paradox, dass man plötzlich mit Staatsanleihen kräftig Geld verdienen kann, und das auch in der Null- beziehungsweise Minuszins-Ära. Besonders kräftig legen die Papiere mit langer Laufzeit zu, weil sich hier die Änderungen des Marktzinsumfelds besonders kräftig im Kurs niederschlagen.

In fact, the anticipation of further rate cuts by the ECB is driving bond prices to bubble territory.  And we all know what happens to a bubble:

Tatsächlich erinnert das Kaufverhalten an eine typische Blasenbildung. Ist es im normalen Wirtschaftsleben so, dass die Nachfrage nach einem Gut oder einer Dienstleistung mit steigendem Preis zurückgeht, gilt das nicht für einen Markt in einer Bubble.

Negative interest rates could contribute to deflationary environment, which - as we've seen in Japan - is hard to reverse, or even control  Once deflation takes hold, a severe recession would surely follow.  Also, German savers begin to believe that the ECB is punishing them for their frugal ways, further turning popular sentiment against the EU. The political winner in such a scenario would be the far-right populist Alternative für Deutschland (AfD) party. 

History - It's Complicated

I confess that I am addicted to coffee.  And my favorite coffee is Major Dickason's Dark Roast Blend roasted and sold by California-based Peet's Coffee.  I drink a cup of Peet's coffee each morning when I wake up, and then several more throughout the day.  I did know that Peet's had been acquired by JAB Holdings, controlled by the Reimann Family in Germany, but only recently did I become aware of the Nazi roots of the Reimann mega-empire of consumer brands.  I personally wasn't surprised, having studied the history of other German enterprises - such as Deutsche Bank and BMW (Quandt Family).  But other coffee lovers have been shaken by the revelation. 

Boston Globe food critic Devra First - like me, a loyal drinker of Major Dickason blend - was horrified and wrote an opinion piece: "I found out Nazi money is behind my favorite coffee.  Should I keep drinking it?"

"I had the perfect cup while staying with friends, and it turned out to be Peet’s Major Dickason’s Blend, a dark-roast “incomparable world blend” I can buy at the grocery store pre-ground. I brew it in the electric coffeemaker my visiting parents gave us when they could no longer stand waiting for the Chemex to mete out their morning caffeine. Welcome to adult life, when strong coffee needs to happen as quickly and painlessly as possible.

I was perfectly happy with this arrangement until in March the German tabloid Bild Am Sonntag reported that the family behind Peet’s parent company JAB Holding had been staunch supporters of the Third Reich, and in fact had built their fortune via Nazi Germany’s large-scale forced-labor system. Honcho Albert Reimann Sr. was a card-carrying Nazi who made donations to the SS, Hitler’s paramilitary force, in the early 1930s. In 1937, according to the New York Times, Albert Reimann Jr. wrote a letter to Heinrich Himmler: “We are a purely Aryan family business that is over 100 years old,” it read. “The owners are unconditional followers of the race theory.”"

Devra First decided - reluctantly - that she could no longer in good conscience drink Peet's Coffee and found a locally roasted coffee as a substitute. 

But history is never entirely black and white, and the history of the Reimann family is no different.  The New York Times published a fascinating article about the family and its secret that the mother of the three surviving Reimann children - who still control JAB Holdings - was Jewish (or half-Jewish):  Emilie Landecker was one of the forced laborers who toiled for Benckiser during the Third Reich:

"Emilie Landecker was 19 when she went to work for Benckiser, a German company that made industrial cleaning products and also took pride in cleansing its staff of non-Aryan elements.

It was 1941. Ms. Landecker was half Jewish and terrified of deportation. Her new boss, Albert Reimann Jr., was an early disciple of Adolf Hitler and described himself as an “unconditional follower” of Nazi race theory.

Somehow, inexplicably, they fell in love.

The story of Ms. Landecker, whose Jewish father was murdered by the Nazis, and Mr. Reimann, whose fervent Nazism and abuse of forced laborers did not stop his family from attaining colossal wealth after the war, is a tale of death and devotion and human contradictions. It is also a tale of modern-day corporate atonement."

The Reimann Family and Peter Harf, CEO of JAB Holdings, have established a foundation - Die Alfred Landecker Stiftung - named after Emilie Landecker's father who perished in the Sobibór death camp, to fund Holocaust research and support democratic institutions.  The new generation of ownership and leadership cannot be blamed for the crimes of the grandfather and are doing perhaps more than other German companies to atone for sins of the past.  So I will continue to wake up to a cup of Peet's Coffee.

Deals from Hell: German Corporations' US Acquisitions

It has been astonishing to watch the slow (and not so slow) downfall of some of Germany's iconic enterprises.  Deutsche Bank, Bayer and Volkswagen come to mind. 

"The simultaneous decline of Volkswagen, Deutsche Bank (DB), and Bayer has been nothing short of stunning. It raises the question as to whether it is merely coincidence, or if there is a larger systemic issue in play. Either way, something is rotten in the state of Germany."

Certainly, with respect to the emissions scandal, which damaged the Volkswagen brand but also ensnared the other German automakers as well as suppliers such as Bosch, there is indeed "something rotten in the state of Germany."

But in the case of both Deutsche Bank and Bayer, the problems are the result of disastrous M&A (mergers & acquisition) strategies.  Deutsche Bank's 1999 acquisition of Bankers Trust put DB deep into business of risky derivatives which then put the bank at the center of the 2007 global financial meltdown - from which it still today has not yet recovered.  Bayer's amazing decline is wholly attributed to its mega-acquisition of Monsanto - one of the most hated corporation on the planet:

"Along with Monsanto’s assets came a raft of outstanding litigation concerning alleged carcinogenic effects of that company’s Roundup weedkiller. Since early last June when the deal was made, Bayer stock has declined a remarkable 50%, sweeping away some $55 billion in market value.What’s so astonishing is that Roundup’s problems were hardly a secret. Some 11,000 cases were pending against Monsanto when Bayer bought the company, which was called by some “the most hated company in the world.” (That might have been a tip-off.) Recently a Northern California jury ordered Bayer to pay $2 billion to a couple who say they were diagnosed with cancer after using Roundup."

The track record of German companies buying up US companies - especially large, publicly listed ones - has not been good.  In Die Welt, Anya Ettel and Holger Zschäpitz write about "Stupid German Money" :

Bayer-Monsanto ist nur das jüngste Beispiel für etliche gescheiterte Übernahmen in den USA. Ausgerechnet bei den besonders spektakulären Transatlantik-Deals haben sich die Dax-Unternehmen in der Vergangenheit Fehlgriffe geleistet. Nähren die deutschen Vorstände also das Klischee vom „Stupid German Money“, viel Geld für wenig Ertrag? Oder ist die Bilanz vielleicht gar nicht so schlecht, allen Misserfolgen zum Trotz?

Before Bayer-Monsanto there was Daimler's unhappy takeover of Chrysler, and the acquisition of Reebok by adidas.  Both deals destroyed $$billions in shareholder value. What's behind such mega-disasters?

Was viele Fehlschläge eint, ist eine falsche Vorstellung davon, was der vermeintlich lukrative Deal in Übersee wirklich bringt. Häufig stürzen sich die Unternehmen in ein Abenteuer, weil das Management in eine Idee verliebt ist, die Prestige, Marktmacht und höhere Gewinne verspricht.

Even when acquisitions don't implode spectacularly in the press there have been many questionable transactions.  Take the German software giant SAP, for example.  SAP - like its US rival Oracle - has struggled for years to migrate its core business to the cloud and has made number of costly acquisitions in this quest.  In 2011 SAP acquired SuccessFactors - basically a glorified online employee performance appraisal application cleverly branded as "business execution software" for $3.2 billion, or 10X revenues.  More recently SAP acquired Qualtrics - a money-losing employee satisfaction survey company cleverly branded as "experience management software" for $8 billion, or 20x revenues.  One analyst commented: "This brings up questions about SAP's acquisition competence. [...] How lipstick was put on the investment opportunity "pig" Qualtrics has to lead one to scratch their head." 

Still, there have been many successful acquisitions by smaller, privately owned companies.  And then there is the spectacular success of JAB Holdings, the privately owned company of the Reimann family.  The company has spent $49 billion buying up American consumer brands such as Green Mountain Coffee, Peet's Coffee, Krispy Kreme, Panera Bread, and many more.  For the most part, JAB's acquisition spree has been highly successful:

"Private companies that manage a successful acquisition-led growth on JAB’s scale are as rare as hen’s teeth because takeovers so often result in a destruction of shareholder value, while the debt that fuels a deal spree remains stubbornly high."

Financial Illiteracy / Finanz Analphabetismus

Kevin Kühnert, chair of the Social Democrat's youth wing, certainly seemed to strike a chord when he suggested that capitalism had run its course and that large enterprises "such as BMW" should be "collectivized".  Here Kühnert and his supporters display a profound ignorance of market economics.  Enterprises - even large ones - come and go; their survival depends on an ability to innovate and adapt to prevailing market forces.  Check out the list of Fortune 100 companies of 1980.  How many are still around and still in the top 100?  Some, like Union Carbide, have been swallowed up other companies, others, like (then) retail behemoth Sears, are just barely alive still, and then others, like Eastman Kodak (200,000 employees), have been put out of business by technological innovation - in this case, Instagram (25 employees when acquired by Facebook).  This is the "Creative Destruction" (Joseph Schumpeter) of market capitalism.

Even the survival of BMW was never a sure thing.  As the economic historian Magnus Brechtken writes in the Süddeutsche Zeitung, it was the timely investment and intervention by Herbert Quandt in the immediate postwar years that rescued the brand from certain extinction:

"Vor gut 60 Jahren erwarb der Unternehmer Herbert Quandt die Mehrheit an den Bayerischen Motoren Werken. Ohne seine Investition wäre die Marke vermutlich verschwunden. Quandts Kinder kontrollieren das Unternehmen noch heute. Wer die Vergesellschaftung ihres Anteils fordert, mag den Applaus derer erhalten, die das zugrunde liegende Prinzip nicht akzeptieren wollen: dass die Investition vor 60 Jahren auch hätte verloren gehen können. Und unternehmerischer Erfolg steht potenziell jedem offen. Auch Kevin Kühnert steht es frei, Juso-Motoren-Werke zu gründen, den Markt aufzurollen und mit seinen Arbeitern kollektiv das Unternehmen zu führen."

And Brechtken makes another good point:  although the Quandt family still has a controlling interest in BMW, a large portion of the shares are owned by British and American pension funds, who gladly invest in DAX-listed shares, even as most Germans avoid stocks altogether:

"Die Kollektivierungsadvokaten übersehen zudem, dass die meisten Aktiengesellschaften, etwa im Dax, "vergemeinschaftet" sind. Das "Kollektiv" der Eigentümer sind meist amerikanische und britische Rentner, die ihre Altersvorsorge über Pensionstöpfe erhalten, in die sie investieren. Im Unterschied zu mehr als 80 Prozent der Deutschen besitzen diese Rentner gern Anteile deutscher Unternehmen."

There seems to be widespread ignorance on how wealth is created (and, indeed, destroyed) which then leads to widespread embracing of socialist fantasies - all the more surprising given the negative example of 40 years DDR.  Germany didn't become the wealthiest nation in Europe by collectivization of its businesses, but rather through constant innovation, prudent investment, and far-sighted management - especially of its Mittelstand enterprises.

Merger of Deutsche Bank and Commerzbank: A Good Idea?

Over the weekend the managements of both Deutsche Bank and Commerzbank confirmed that they are holding discussions concerning a possible merger of Germany two largest banks. This follows the wish of Germany's Finance Minister Olaf Scholz to create a "national champion" - a German flagship institution that can compete on the global stage with the giant US and China banking institutions.  Certainly Scholz has a vested interest in such a merger, since the Federal Republic still has a 15% ownership stake in Commerzbank, a legacy of the Great Recession.  On paper, a merger might make sense, since it would combine Deutsche's capabilities in trading and advisory services with Commerzbank's traditional strength as lender to Germany's Mittelstand.  A German "champion" bank would be the defacto Hausbank for Germany's exporters:

For Berlin, combining the two would create a new national champion lender that could support the country’s huge export industry and compete for international business with the giant Wall Street banks. For the lenders, it offers the opportunity to gain financial scale, cut costs and combine technology.

Still, it's hard to see how combining two institutions that destroyed billions of euro in shareholder value over the past decade could be a success.  Even with a combined $2 trillion in assets a DeutscheCommerz could not compete with the big US banks.  Last year Commerzbank reported net earnings of €133 million, while DB lost €409 million.  JPMorganChase, in contrast, had net earnings of $30.7 billion. 

Most analysts are less than enthusiastic:

Das neu entstehende Institut - letztlich eine Viererbande aus Deutsche Bank, Commerzbank, Postbank und Dresdner - wäre ewig mit sich selbst beschäftigt. Noch mehr Kunden würden zur ausländischen Konkurrenz abwandern. Wo das nötige neue Kapital herkommen soll, ist völlig unklar. Ein überzeugendes Geschäftsmodell ist nicht in Sicht. An der nötigen Härte, die das Management beider Banken bräuchte, um die Fusion durchzuziehen, gibt es große Zweifel. Und auch die "Deutsche Commerz" wäre zu klein, um global eine wichtige Rolle zu spielen.

Any chance for the merger to work hinges on the ability to cut staff - something the trade unions in Germany will resist.  The combined bank would have over 140,000 employees, half of whom work in Germany.  It is projected that at least 40,000 in cuts would be needed to show the level of profitability required to attract new capital. 

On the other hand, a merger might be the best last chance for Deutsche Bank.  It is highly unlikely that any foreign bank would be interested in acquiring the scandal-ridden bank, especially since new scandals are likely to surface once the bank's dealings with the Trump organization are fully disclosed.  It is hard to see how the once-proud Deutsche Bank can continue to limp along as an independent institution.

How Deutsche Bank Covered Up $1.6 Billion Trading Loss

The Wall Street Journal published an excellent piece last week about YET ANOTHER scandal at Germany's largest bank.  Surprisingly, it got little play in the financial press in Germany - probably a sign of scandal fatigue with respect to Deutsche Bank.  This latest chapter in the saga of DB's slide into obscurity has to do with a complex municipal bond trade the bank made back in 2008.

Deutsche Bank AG DB +1.71% racked up a loss of $1.6 billion over nearly a decade on a complex municipal-bond investment that it bought in the runup to the 2008 financial crisis, and failed to confront head-on even as markets were upended and regulations tightened.The loss, which hasn’t previously been reported, represents one of Deutsche Bank’s largest ever from a single wager—roughly quadruple its entire 2018 profit—and ranks as one of the banking industry’s biggest soured bets in the last decade.

As the losses on the trade mounted, DB failed to mark the securities to market, even as the bank went again and again to the capital markets to issue shares in order to shore up its balance sheet:

Deutsche Bank resisted for years reducing the value of those bonds and related derivatives on its books to a level that markets suggested they were worth, and it brushed aside concerns raised by the bank’s financial auditors about how it was valuing the trade, according to internal bank documents and people involved in discussions about the investment.During that time period, the bank was telling investors its internal financial controls were sound, and it raised billions of dollars in the capital markets without any disclosure of the bond valuation issue. Behind the scenes, the badly timed bet exerted a sustained drag on the bank’s finances.

Even today, more than a decade after the disastrous trade, the bank has failed to come clean to investors on the scope of its loss.

Senior Deutsche Bank executives continued debating as recently as mid-2018 whether to restate past financial results tied to the municipal-bond trade, according to people briefed on the review. They decided not to, and the internal investigation closed.

Other than a short piece in Manager Magazin, the WSJ piece generated little interest in Germany, even though DB management consistently lied to investors as it sold $billions in shares.  Expect more class action lawsuits from investors, and expect another deluge of bad press as the details on DB's involvement with Donald Trump and Russian money-laundering are revealed in connection with the Mueller investigation. 

Friedrich Merz and the Demonization of Success

I have no idea whether Friedrich Merz would be the best leader for the Christian Democrats (CDU) as successor to Angela Merkel.  The issue is anyway more or less irrelevant, since it appears that Annegret Kramp-Karrenbauer will get the nod.  But the sometimes hysterical attacks on Herr Merz in the German media are ridiculous.  Merz has been a successful attorney and has held various positions with financial institutions. Through his work he has managed to accumulate some wealth.  For many, this would seem to disqualify him as chancellor.

"But questions about Mr Merz’s wealth are beginning to damage his campaign. Few Germans have entered politics after a successful career in the private sector and voters are generally sceptical of millionaires seeking public office. “None of the chancellors who have governed Germany since the second world war were rich — they all lived modestly,” said Gerhard Bosch, a sociology professor at the University of Duisburg-Essen."

“[Germans] just don’t really trust very rich people or big companies,” Thomas Druyen, a sociologist at Sigmund Freud University in Vienna, told German radio. “It’s absurd of course, but it’s a part of our psychological DNA.”

In particular, people are upset about Merz's position as supervisory board chairman of the American fund manager BlackRock Inc.’s German asset management unit. BlackRock funds hold equity stakes in many of Germany's largest corporations, therefore it is believed that Merz is part of some American conspiracy to control the Germany economy.  This is absurd, of course, since Blackrock typically controls less than 5% of the shares of any company - hardly enough to influence the corporate boards.  BlackRock also holds similar positions in US, UK, French, and Japanese corporations.  These funds allow small investors (including German investors) to build wealth by owning a basket of securities rather than buying individual stocks.  Yet BlackRock is seen as an evil enterprise. Here is Jens Berger, writing in the Kremlin-friendly news portal NachDenkSeiten:

Heute ist Merz Aufsichtsrat und Lobbyist von BlackRock Deutschland – einem Finanzgiganten, der sich für die Interessen der Wall Street und gegen die Interessen der Allgemeinheit einsetzt. Oder um es zuzuspitzen: Merz hat sein Millionenvermögen stets ganz explizit mit Tätigkeiten verdient, die gegen die Interessen der Allgemeinheit gerichtet waren. Das ist der entscheidende Punkt! Darum ist Merz auch aufgrund seiner beruflichen Vergangenheit der falsche Kandidat für ein öffentliches Amt. Die Summe seiner Einkünfte ist dabei nebensächlich.

Berger doesn't explain why offering an investment vehicle to small investors to participate in the wealth of Germany's businesses is "against the common interest" (gegen die Interessen der Allgemeinheit) unless he believes that owning shares is by itself an evil undertaking.  Merz himself has criticized his countrymen for shunning stocks and putting their money instead into low interest bank savings accounts.  Only 15% of Germans own equity investments compared to 50% of Americans. 

Berger's criticism of Merz is particularly ironic since Berger's hero- Vladimir Putin - has accumulated at least $2 billion through corruption  - as revealed in the Panama Papers. At least Merz made his (modest) fortune legally, and through his own efforts.

Deutsche Bank's Final Humiliation

I worked for Deutsche Bank as a young banker during the Alfred Herrhausen era.  At that time, DB was on top - with its sterling balance sheet and AAA debt rating, it was considered the most powerful bank in Europe and dominated corporate lending and investment banking for German industry.  Back then, we looked up to only two other financial institutions: Morgan Guaranty for its corporate lending activity, and Goldman Sachs for its underwriting, trading and advisory services.  Herrhausen dreamed of surpassing both of these banks and set DB on the course of becoming the the most powerful investment banking house with the acquisition of Morgan Grenfell in 1989.  At the time, it seemed like a brilliant strategic move, bringing Anglo-Saxon know-how into the German institution.  But it contained it seeds of the bank's downfall.  We'll never know whether the strategist Herrhausen could have corrected course, since he was assassinated shortly after closing the deal with London bank.  I briefly rejoined DB's investment bank while Hilmar Kopper was CEO, but by then the bank was already faltering.  The acquisition of the New York casino bank Bankers Trust in 1999 sealed its fate for good.  

"There's no doubt Deutsche Bank bought itself plenty of trouble in buying BT, Wall Street's bad-boy institution.For starters, BT executives routinely pocketed unclaimed customer cash in what prosecutors described as a vast slush fund. In 1999 the bank pleaded guilty to three felony charges and agreed to pay $63 million as part of a settlement with state and federal authorities."

To make matters worse, Bankers Trust was the leading developer and purveyor of derivatives - and these "innovative" products eventually led to the global financial collapse of 2008, from which we are still recovering.  DB was at the center of EVERY single scandal surfacing from the meltdown, and has been forced to pay $billions in fines and no doubt will continue to pay $billions more for pending lawsuits.  Bankers Trust also brought Donald Trump into DB after every other New York bank shunned the charlatan real estate developer.  That relationship, along with DB's laundering of $billions for Russian oligarchs , has placed the bank in the cross-hairs of US special prosecutor Robert Mueller. 

DB's new CEO, Christian Sewing, is hoping to put all these problems behind by returning the bank to its roots: financing German business.  But it may be too late for that:

"From corporate giants to specialist engineering firms, Germany Inc.’s once-solid allegiance to Deutsche Bank is waning after years of crises stemming from efforts to emulate Wall Street investment banks, according to discussions with numerous executives.

After working with Deutsche Bank for more than half a century, “I feel genuine regret for the decline of this once so proud and trusted institution,” said Reinhold Wuerth, the 83-year-old billionaire and patriarch of building-materials maker Wuerth Group. But those woes “hardly influence our business, as there are all kinds of banking services available in the European Union,” said Wuerth, an elder statesman of the country’s vaunted Mittelstand of small- and medium-sized companies, which make up the backbone of the economy."

So the mighty DB can't even compete with 3rd-tier Italian lenders. Oh the humiliation!