Helping to sell off thousands of formerly state-owned companies in eastern Germany isn't much different from investment banking, according to Karlhermann Kloettschen, managing director of the New York office of Germany's privatization agency, the Treuhandanstalt.
The difference, he noted, is that instead of doing two to three deals a month, the German government agency does 20 to 30 a day.
"It's sort of mass-produced investment banking, only you can't use the normal procedures," said the 55-year-old former international banker.
Mr. Kloettschen, named head of the New York office this month, is looking for U.S. buyers for the thousands of companies Treuhandanstalt still has to sell.
American investors' 51 acquisitions, totaling almost $1.8 billion, make the United States the third-most-important source of foreign capital in eastern Germany, after Britain and France. Mr. Kloettschen said he hopes to boost the number of U.S. acquisitions by at least 50% over the next four to six months.
The main attractions to investors, he explained, are the location and political stability of Germany's five eastern states and their rapid growth and abundance of skilled labor.
But he acknowledged that it won't be easy to attract foreign companies in the current depressed environment.
"A number of investors hesitate to make major investments because of the slowdown in the economy," Mr. Kloettschen said.
A Difficult Sell
Other problems are that many companies in eastern Germany have lost markets elsewhere in the former Soviet empire, "many still suffer from low productivity, and a lot haven't fully restructured."
U.S. banks, with the exception of Citicorp, are unlikely to expand their presence in eastern Germany. Most local retail and corporate business has been grabbed up by big banks from western Germany, and any wholesale business can be handled out of Frankfurt, Mr. Kloettschen explained.
"On the whole, we find that U.S. banks are on the retreat."
Born in Germany's Ruhr Valley, Mr. Kloettschen completed undergraduate studies at the University of Berlin. He then took a master's degree at Harvard Law School and studied international law in Sao Paolo, Brazil. Returning to Europe, he took a doctorate in law from Cologne University and an MBA from the Insead business school in Fontainbleau, France.
International Career
He began his career with the Berliner Handels und Frankfurter Bank but soon left to join Morgan Grenfell, the London-based investment bank recently acquired by Deutsche Bank. Then he went on to Hong Kong and Shanghai Banking Corp., heading its European wholesale operations out of Frankfurt and Zurich.
Before joining Treuhandanstalt, Mr. Kloettschen was chairman for several years of the German subsidiary of Arab Banking Corp.
As head of Treuhandanstalt's New York office, he will divide his time between Germany and the United States.
"The name of the game is information," he said, "so you have to keep abreast of what's happening here and at home."
