The Dissolution of the Heart of Deutschland AG

The aim of this paper is to study to what extent the “heart” of Deutschland AG – defined as the set of cross-shareholdings and cross-mandates between the major german financial institutions – has been quickly eroded. Then, we analyze the impact on the bank/industry model. We find that large financial institutions have abandoned their traditional role of Hausbank, selling their industrial holdings, deserting supervisory boards and shareholders’ meetings. After presenting the DB strategic mutation, we empirically quantify the destabilization of the “heart” of Deutschland AG. Finally, we consider the implications on the role of banks in the governance of the industry.