June 25, 2012 / 1:32 PM / 6 years ago

Morgan Stanley German head steps aside in email row

FRANKFURT (Reuters) - The head of Morgan Stanley’s (MS.N) German unit and one of the country’s best-connected dealmakers has been granted a leave of absence by the bank following an uproar over emails he reportedly exchanged with a regional politician.

The headquarters of Morgan Stanley is seen in New York June 1, 2012. REUTERS/Eric Thayer

Dirk Notheis, 44, has run the U.S. investment bank’s operations in Germany and Austria for over 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 is reported to have sent to the premier of Baden-Wuerttemberg in 2010, when the southwestern state was trying to purchase a stake in local utility EnBW from French energy giant EDF.

In the mails, 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 the regional leader Stefan Mappus, who like the banker is a member of Merkel’s Christian Democratic Union (CDU).

The exchange 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.

The departure is a blow for the U.S. investment bank, which had come to rely heavily on Notheis to deliver lucrative advisory roles in mergers and acquisitions, known as mandates.

“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 1995-2005.

Other members of Morgan Stanley’s board will assume Notheis’s responsibilities for day-to-day business.

It was not clear when or if Notheis would resume his responsibilities, people familiar with the situation said.

In Germany, Morgan Stanley ranked second behind Deutsche Bank (DBKGn.DE), and ahead of U.S. rival Goldman Sachs (GS.N), in mergers and acquisitions rankings in the year-to-date, Thomson Reuters data show.

The emails touched on efforts by Baden-Wuerttemberg to acquire a 45 percent stake in local utility EnBW (EBKG.DE) from EDF (EDF.PA).

Notheis appears to give Mappus advice on how to limit time for political debate on a renationalization of EnBW.

“Call a confidential meeting at the state ministry with three politicians but without the supervisory board chairman, initially without giving a reason,” one of the mails from Notheis to Mappus published in Handelsblatt reads.

He says Merkel’s assistance will be needed to persuade the EDF to sell and suggests Mappus should meet with then French President Nicolas Sarkozy. “Ask Mutti if she can arrange that,” Notheis reportedly wrote.

Baden-Wuerttemberg eventually bought the EnBW stake in December 2010 for about 4.7 billion euros. But the state has since launched a probe into the deal and sued EDF, saying it overpaid to the tune of 2 billion euros.

Morgan Stanley provided the emails to the state government as part of the probe.

Asked about the case on Monday, Merkel’s spokesman Steffen Seibert said Berlin had not been involved in the EnBW talks and therefore could not comment on them.

“The negotiations on the purchase of EnBW stake by the regional government of Baden-Wuerttemberg were handled by the regional government. Therefore, the federal government has no knowledge of the details of these negotiations,” Seibert said.

Reporting by Philipp Halstrick, Edward Taylor, Jonathan Gould, Gernot Heller; Writing by Noah Barkin

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