But many German politicians are opposed to foreign takeovers of big companies, preferring to create national champions inside Germany's borders. That hasn't been Breuer's view. He has pushed Deutsche to expand abroad, acquiring Bankers' Trust in the US in 1998, listing on the New York Exchange in 2001, and adopting a more Anglo-Saxon approach to shareholder capitalism.

But Breuer believes there must be some limits to the way the system operates, particularly in Germany, where there is still widespread support for social capitalism, with its emphasis on workers' rights and employee protection.

Breuer has been irritated that Seifert's plan to take over the London Stock Exchange was initially thwarted by hedge funds. These can be short termist, and regulators are concerned about the lack of transparency about their operations.

Last week, Breuer criticised TCI and Atticus, the most prominent of Deutsche Börse's hedge fund dissenters, saying they appeared to have a different agenda from other investors. And Breuer defended Seifert, saying it would disastrous if he was removed. One of Breuer's advisers said: 'Why shouldn't he [Breuer] support Seifert? He is a chief executive who has presided over a big expansion in the Börse's business and a corresponding jump in the share price'.

A day earlier, Hans Eichel, the German finance minister, intervened, saying there may be a case for imposing regulations to prevent people making a quick profit. This was seen as an attack on TCI, Deutsche Börse's biggest shareholder.

But the row at Deutsche Börse is more than about the role of hedge funds, which have found support among blue chip investors such as Fidelity, Merrill Lynch, Standard Life and Generali, the Italian insurer.

Like the hedge funds, these more long-term investors were disturbed by the fact that under German corporate law, there was no need for Breuer and Seifert to put the proposed takeover of the LSE to a shareholder meeting. Breuer, despite his preference for a more liberal style of cap italism in Germany, hasn't fully grasped the corporate governance nettle.

A British fund manager says: 'If you look at the supervisory board of Deutche Bank, whose shareholders are predominantly from outside Germany, you find few overseas directors and a majority of people without banking experience'.

The problem for Breuer is that German supervisory boards are products of the 1960s, when they reflected the close alliance between industry and society as a whole. But they look like oddities at a time when many German companies are becoming more shareholder-orientated.