Bloomberg News

Deutsche Bank Risk Chief Says Breuer Didn’t Ask About Kirch Loan

December 12, 2011

Dec. 12 (Bloomberg) -- Deutsche Bank AG Chief Risk Officer Hugo Banziger told a German court he doesn’t remember discussing the financial situation at Leo Kirch’s media group before February 2002 with the bank’s then-chief executive Rolf Breuer.

Banziger, who testified today at Breuer’s trial in Munich, said Breuer never asked further questions about Kirch’s situation mentioned in bank memos. While Breuer attended a 2001 meeting where Banziger, chief credit officer at the time, talked about a loan to Kirch, Banziger said the briefing was mainly for the supervisory board rather than executives.

“At that time, I rarely talked to Breuer and we mostly discussed effects of the dot-com bubble,” said Banziger. “I don’t remember that Kirch was an issue during these conversations.”

Kirch, who died in July, was once one of Germany’s biggest media tycoons and pursued civil lawsuits against Breuer and Deutsche Bank seeking at least 3.3 billion euros ($4.4 billion). The lawsuits, which are continuing after Kirch’s death, claim his company failed after Breuer questioned its creditworthiness in a 2002 Bloomberg TV interview.

The criminal trial centers on a 2003 appeals court hearing in one of the Kirch suits where Breuer testified his TV- interview comments were based on public information, not bank data. Breuer said he “had never seen the Kirch credit file” at the bank, nor correspondence with German financial regulators concerning Kirch, according to the indictment.

Board Briefing

Prosecutors charged Breuer with attempted fraud, claiming he lied to avoid a conviction and that his initials are on a copy of a regulator’s September 2001 letter asking about risks of the Kirch loan. They also cite the supervisory board briefing by Banziger as evidence Breuer knew details about the loan.

Bernd Stuebing, a former Deutsche Bank credit analyst, told the court earlier today that, while he didn’t have first-hand knowledge, he assumed Breuer was continuously briefed about the details on the loan.

“This was a prominent engagement and the management board had overruled the credit committee’s vote against it, so it seemed clear to me that it was closely watched by the top executives,” said Stuebing. “My impression was that Breuer was responsible and two other bank employees told me they briefed him regularly.”

That contradicted testimony last week by former Deutsche Bank Chief Counsel Hans-Dirk Krekeler, who said Breuer wasn’t involved in the details of the loan and didn’t know specifics at the time of the interview.

Munich prosecutors opened another probe against Breuer and other Deutsche Bank managers, including current CEO Josef Ackermann, earlier this year over testimony they gave in a separate case pending at a Munich appeals court.

--Editors: Christopher Scinta, Heather Smith

To contact the reporter on this story: Karin Matussek in Munich via kmatussek@bloomberg.net

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net


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