Scudder executives in the United States are not the only ones sweating from the Deutsche Bank's acquisition of the fund manager. Josef Ackermann, the newly appointed chief executive of the German-based bank is also under pressure to make sure that the deal works, says a Reuters report out of London. Those pressures are leading to changes that Deutsche executives hope will create a diamond.

The pressure in Germany means that US based employees are also feeling the heat. For many Scudder executives the change in the atmosphere at the firm from that of a collegial partnership to that of a small unit of a bottom-line driven global conglomerate is too much. As a result, the MFWire has heard of low morale at the firm as surviving staff watch senior and retired Scudder principals cashing in through the merger.

The departures on the business side include Mark Cassady, who ran its fund business after first building the firms defined contribution business.

But fixing morale as the firm loses its independence is not the only issue. Word is spreading that Deutsche is seeking a way to sell its full-service 401(k) business. Consultants watching the firm say that such a move would make sense since Bankers Trust unloaded its business to MetLife five years ago. That unit has also had high turnover in the past two years and the once successful Kemper side of the business is essentially dismantled.

Scudder has also lost a number of high profile investment professionals. The firm has already announced that it has cut 80 of its investment professionals to reduce their ranks to 201. Among the portfolio managers who have recently left the firm are Seung Kwak and Irene Cheng.

The cuts should have been expected at the firm, though; as they follow a pattern set by Deutsche after it acquired Bankers Trust. Indeed, in that case Deutsche let go nearly all of the senior Bankers Trust staff in the fund group after taking over the firm.

Ackerman told Reuters that he will focus on building the affluent business handled by Scudder to justify the acquisition. Deutsche paid $2.5 billion, or roughly one percent of assets for Scudder. Executives in Germany are also reportedly hoping that Scudder will open doors to retail fund business in the US. This may be a tough task to achieve as even before the acquisition Scudder was having problems growing its retail businesses quickly as hoped. Its response was to drop its no-load structure and target intermediary distribution.

"We have to position ourselves to get that (retail) money. We want to be there," Karl Sternberg, Deutsche's global equity head told Reuters.

In the United States Deustche will brand its retail funds under the Scudder name. In the United Kingdom and Germany the funds will carry a DWS brand and in Italy they will go under the Finanza e Futuro label.  

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