May 26, 2009 / 8:59 AM / 10 years ago

UPDATE 2-Deutsche Bank backs chairman as spy probe looms

* Chairman toughs it out in wake of power struggle

* Deutsche CEO promises to personally oversee spying probe

* Stock price down 2 percent

(Adds background, further details)

By John O’Donnell

FRANKFURT, May 26 (Reuters) - Deutsche Bank (DBKGn.DE) again backed embattled chairman Clemens Boersig on Tuesday as talk swirled over a failed challenge to Swiss Chief Executive Josef Ackermann and a spying probe cast a shadow over the bank.

Taking the stage in front of shareholders at the annual meeting, Ackermann faced down criticism from shareholders and pledged to personally investigate spying at the bank, which it last week confirmed had taken place.

“Whenever we establish that the rules have been broken, there will be immediate action,” the bank’s Swiss boss told a crowded hall of investors. “I have put myself at the head of the investigation.”

Last week Germany’s financial watchdog said that it would investigate spying at the bank.

The episode — it is unclear who was monitored and when — has cast a pall over the group and comes weeks after a surveillance scandal forced the departure of top management at Germany’s national rail operator Deutsche Bahn.

The spying affair provided some distraction for Deutsche Bank investors from what sources have described as a power struggle at the top of the bank.

BULL FIGHT

Reports of a row between the group’s straight-talking chairman and Ackermann have dominated German media for weeks, raising the spectre of a split at the top of the country’s biggest lender.

Sources familiar with the matter have said Boersig pushed aside Ackermann’s preferred successor last month and made an unsuccessful bid for the chief executive’s job himself.

But the group’s supervisory board threw out his offer, say the insiders. Instead Ackermann postponed his planned retirement, keeping the job for himself until 2013.

On Tuesday the group’s supervisory board attempted to throw cold water on claims that Boersig had made a failed bid for the top job.

“The supervisory board considers the criticism of Dr. Boersig ... to be completely unfounded,” said Tilman Todenhoefer, a representative of the supervisory board. “He did not pursue personal objectives at any time.”

Separately, Ackermann said the bank was bracing itself for a difficult year as the global economy struggles to emerge from recession.

Ackermann, who initially described the credit crisis as over for his bank before it had really begun, has chalked up more than 10 billion euros ($14 billion) of writedowns. ($1=.7158 euros) (Editing by Greg Mahlich)

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