Morgan Stanley Germany head steps aside in email row

Mon Jun 25, 2012 1:55pm EDT
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FRANKFURT (Reuters) - The head of Morgan Stanley's (MS.N: Quote) German unit, one of the country's best-connected dealmakers, has been granted leave of absence by the bank following an uproar over emails he reportedly exchanged with a regional politician.

Dirk Notheis, 44, has run the U.S. investment bank's operations in Germany and Austria for more than three years, earning a reputation as an aggressive banker with close ties to Chancellor Angela Merkel's ruling conservatives.

He came under fire in the past week after German newspapers published copies of emails Notheis reportedly sent to the premier of Baden-Wuerttemberg in 2010, when the southwestern state was trying to purchase a stake in local utility EnBW (EBKG.DE: Quote) from French energy group EDF (EDF.PA: Quote).

In the emails, which could not be independently verified by Reuters, Notheis casually refers to Merkel as "Mutti", German for "mom", and sometimes appears to be ordering around regional leader Stefan Mappus, who like the banker is a member of Merkel's Christian Democratic Union (CDU).

The reports sparked a wave of criticism, in part because it highlighted the cozy relationship between bankers and politicians at a time when many Germans are up in arms about the role banks have played in the global financial and euro-zone debt crises.

"Dirk Notheis has informed the supervisory board that he will take a leave of absence," a Morgan Stanley spokeswoman said on Monday, a day after Reuters reported that Notheis had tendered his resignation.

The spokeswoman said Notheis's responsibilities as country head for Germany and Austria would be taken over by supervisory board chairman Lutz Raettig, who is well known in the Frankfurt financial scene and served as Morgan Stanley's country head from 1995 to 2005.

The bank also retains the services of Christian Zorn and Johannes Groeller, who have been co-heads of investment banking for Germany and Austria since Notheis was elevated to his role as head of Germany back in 2009.

The move is nonetheless a blow for the U.S. investment bank, which had come to rely heavily on Notheis and his political connections to deliver lucrative advisory roles or mandates in merger and acquisition deals.   Continued...

Morgan Stanley's New York headquarters are seen at the corner of 48th Street and Broadway in New York May 22, 2012. REUTERS/Andrew Burton