Visit to the Berlin headquarters of a big German bank

April 29, 2009:

This morning I visited a good young friend and fellow fan of the Berlin professional soccer team, Hertha B.S.C. He also looks after my modest German bank account. R. was in his new office in the headquarters of the Commerzbank in Berlin, where he was recently permitted to set up an international private banking function.

The headquarters is housed in a small, utterly charming yet modest classical building on the now elegant Pariser Platz, the showplace square of the city, sandwiched between the Brandenburg Gate and the new U.S. Embassy. It sits across the square from the prestigious Hotel Adlon and the French Embassy. I had been eager to enter that building since it was remodeled three or four years ago, and today was the day.

I found upon entering that the headquarters was like the Berlin offices of many national firms, such as Deutsche Telecom and Deutsche Bank, in that the building is basically a shell and a showplace. The building houses an enormous conference room, an large room for meetings and lectures and a generous space that serves as a ballroom or cocktail party area - in short all the elements needed to show the corporate flag in the new capital city but nothing essential to the direction or operation of the bank, all of which remain safely in Frankfurt. The windows are Canadian oak, and the parquet floors gleam to distraction. There is a pretty garden behind the building that fronts on the street that runs from the U.S. Embassy on the south to the Brandenburg Gate immediately to the north just west of Pariser Platz. The Tiergarten is across that street. The garden is separated from the street by a massive iron fence, and R. remarked that he was never sure whether the people on the street were being kept out or the bankers were locked in.

I was struck by two items of information that R. imparted to me:

1. He reminded me that some months ago, at the polite request of the German government, Commerzbank had absorbed the venerable Dresdner Bank, which had fallen on hard times. The government was in no mood for a failure of a major bank and even less in the mood for a nasty takeover of a key financial institution by some Arab or Asian sovereign fund. The government now owns about a third of the stock of Commerzbank, and the stock is selling for about one-third of book value.*

2. There is a spacious office on the same floor near R.'s - there might be the only two in the headquarters - occupied by an important Herr V. I was not invited to visit it. Herr V. must be important because his name was whispered, so of course I couldn't catch it, although I think I was expected to know it. It happens that Herr V. is the chief, or at least a highly placed, liaison between the German Armed Forces and the government, presumably the Chancellor and the Bundestag. At the same time he works for the Bank.

And there, ladies and gentlemen, you have Europe in a nutshell.

* I have not verified the book value to stock price ratio.