MEHMET DALMAN, the head of Commerzbank’s investment banking operations, quit yesterday as the bank prepares to scale back its global ambitions to concentrate on servicing the German market.

Mr Dalman, who joined Commerzbank Securities seven years ago to build an international investment bank, is expected to be replaced by Wolfgang Matis, head of global markets for Deutsche Bank in Germany. Mr Dalman is thought to be poised to set up a hedge fund company in London with former colleagues. His departure had been expected for some time, amid rumours that he had clashed with Commerzbank’s board members about the future of the investment banking division.

The Commerzbank Securities head is thought to be discussing his severance terms with the board. No one would comment yesterday on whether Mr Dalman would be in line for a payoff.

His departure comes just ahead of a radical overhaul of the securities division, which employs an estimated 2,000 staff worldwide, including 1,100 in the City of London.

A source yesterday insisted that the reorganisation and Mr Dalman’s departure did not mean the bank was planning to leave investment banking altogether.

Commerzbank has already closed down its derivatives operation in the US as part of the reorganisation, with the loss of ten jobs.

At an analysts’ presentation earlier this week, at which Mr Dalman was not present, Commerzbank executives outlined plans to withdraw from businesses where they could not build scale. Now the bank is expected instead to concentrate on providing financial products to middle-ranking German corporations.

Commerzbank hired Mr Dalman in 1997 from Deutsche Morgan Grenfell Capital Markets, where he was managing director and general manager responsible for Japanese equities and Asia Pacific equity derivatives.

Earlier this year, Commerzbank Securities made headlines with reports of simmering resentment about the level of bonuses being paid to bankers in the division as Commerzbank struggled to overcome a €2 billion (£1.4 billion) loss.

This was seen as indicative of German commercial bankers’ resentment of London staff, and prompted rumours of a boardroom split.

At times Mr Dalman was openly critical of his German banking parent. However, he managed to hold on to his position during the summer despite mounting rumours of his imminent departure.

Mr Dalman, a Turkish Cypriot, is a football fanatic and retained his links with the sport while at Commerzbank, proving his ability to generate headlines while acting as an adviser to Malcolm Glazer, the American entrepreneur who has been buying stakes in Manchester United.

FOLLOWING THE TREND

THE decision by Commerzbank to abandon plans to build an international investment bank mirrors the path taken by other European banks over the past decade, including Barclays, Dresdner of Germany and ING of the Netherlands.

All three have been forced to scale back grand ambitions in the face of the continued dominance of the Wall Street firms in capital markets worldwide.

Commercial banks have come under financial pressure because of rising bankruptcies and soaring bad debts, while there has been continuing employee resentment over the level of bonuses earned by investment bankers.

Resentment over pay levels is thought to have contributed to the decision to retrench in the case of Commerzbank and ING.

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