Munich - Even in the historic centre of Munich, the Palais Preysing stands out: Sitting just opposite the Bavarian royal palace, the 289-year-old baroque confection practically drips with ornate stucco decorations.
Beyond its grand entrance, a red carpet leads up a sweeping staircase resting on the shoulders of intricately carved caryatids. But like many of its less glamorous neighbours, the building has been divided into suites for doctors, dentists, and lawyers. And tucked in among the nameplates is the plaque of a certain “D.A.L.F.A. Munich Office.”
That’s an acronym for the surnames and the private offices of a quintet of Germany’s most influential corporate kingmakers: Michael Diekmann, Ann-Kristin Achleitner, Peter Löscher, Joachim Faber, and Paul Achleitner, Ann-Kristin’s husband.
The office mates hold seats on the supervisory boards of 10 of the 30 members of the benchmark DAX Index and board positions on more than a half-dozen other companies in Germany and abroad.
The concentration of power is reminiscent of what a generation ago was called Germany Inc., the network of executives who ran big companies in the post-war era.
Paul Achleitner, 60, on Thursday stands for re-election as chairman of the supervisory board of Deutsche Bank AG, Europe’s largest investment bank.
Löscher, who has been on the board since 2012, is scheduled to resign that day. Diekmann, 62, was named chairman of Allianz SE, Europe’s biggest insurer, earlier this month. Faber, 67, heads the supervisory board of Deutsche Börse AG, the No. 1 operator of financial exchanges in Europe.
The five say D.A.L.F.A. is simply a convenient place to work and their relationships and exchanges there are purely personal. While conference rooms and the kitchen are shared, they all have their own offices and computer systems to ensure compliance with financial regulations, and they say matters relating to their board roles are strictly confidential.
“This is a private office of a group of friends,” says Achleitner, who opened the place five years ago with his wife. “If we were to meet privately over lunch or dinner, we would be sitting together just the same.”
In the 1950s and ’60s, Germany’s underdeveloped capital markets fostered deep financial ties among companies, particularly banks and insurers such as Deutsche Bank and Allianz. That left oversight largely in the hands of a small group of executives who sat on multiple supervisory boards.
Allianz shed its biggest stakes in other German companies around the turn of the century, when a tax reform encouraged divestment of holdings. Toward the end of that period, Diekmann was named Allianz’s chief executive officer, where Faber and Paul Achleitner served on the board cementing the friendships reflected today in the Palais Preysing.
To ensure private relationships don’t interfere with business, the layout, computer systems, and security have been closely vetted, and Paul Achleitner says it’s relatively uncommon that they’re all on site simultaneously.
“We are aware of the D.A.L.F.A. office partnership in Munich, and while it has a bit of an unpleasant aftertaste, we would expect that compliance rules have a high priority and are being followed,” says Alexander Juschus, general manager for Germany for IVOX Glass Lewis GmbH, a consultancy that advises institutional investors on proxy votes. Deutsche Bank and Allianz say they’re comfortable with the confidentiality measures.
The Achleitners have deep ties to Germany’s financial elite. Both worked as management consultants and now teach business, and Paul played a key role in dismantling the Germany Inc. relationships as Allianz’s finance chief and before that as the Goldman Sachs Group Inc. partner in charge of the bank’s German business.
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He played a role in deals such as the initial public offering of Deutsche Telekom AG and Allianz’s sale of Dresdner Bank AG to Commerzbank AG. When Paul departed Allianz for Deutsche Bank in 2012, the Achleitners rented the office, in one of Munich’s most prestigious neighborhoods. “For a professional job, you need professional facilities,” says Ann-Kristin, 51.
The place was too big for the Achleitners, so they took in their friend Faber, a former CEO of Allianz’s asset management unit. “Splitting the rent with others is efficient, and I have the advantage of knowing exactly who my neighbours are,” Ann-Kristin says.
Löscher, 59, a friend of Paul’s and a fellow Austrian, had spent his first nights in Munich at the Achleitners’ home when he was appointed CEO of Siemens in 2007. When Löscher was ousted in 2013, Achleitner offered him a spot in the Palais Preysing offices.
Then in 2015, Diekmann moved in upstairs and an internal staircase was added to link the two floors. “It can be lonely at the top of a company,” says Diekmann. “Here we meet as normal people and not as board members.”