Deutsche Bank chiefs struggle to convince disappointed shareholders
A fake tombstone mocked up by protesters outside Deutsche Bank in Frankfurt, where shareholders took the lender’s leadership to task (Daniel ROLAND)
Frankfurt am Main (AFP) – With a share price at its lowest-ever ebb, weedy business performance and a heap of anti-money-laundering failures, Deutsche Bank came in for robust criticism from shareholders Thursday at its annual general meeting.
Although “we’re seeing the first signs of your strategy,” a share price touching lows of 6.35 euros ($7.07) on Thursday “reflects investors’ huge concerns” about the future of Germany’s largest lender, small shareholders’ representative Klaus Nieding told chief executive Christian Sewing.
It was “indispensable” for bosses to change the tune at the investment banking arm, Nieding added, although he praised executives for recent merger talks with rival Commerzbank that ultimately fell through.
Alexandra Annecke of Union Investment was less temperate, judging that “shareholders have reached the end of their patience” — adding for good measure that “directors’ salaries bear no relation to performance or the share price”.
Sewing took home seven million euros in 2018, including 3.7 million euros in bonuses, as the bank tiptoed back into the black for the first time in years.
Several shareholder representatives have already said they would vote against the bank’s leadership later Thursday, criticising especially supervisory board chief Paul Achleitner, seen as having failed over the past seven years to bring the institution back on course.
In a speech, Sewing defended his record since taking the reins from crisis firefighter John Cryan just over a year ago.
His adjustments to the bank’s strategy have refocused it on its European core and on the most dependable revenue-generating business lines.
Sewing added that “we’re prepared to make tough cutbacks” in the investment bank, once the flagship unit before being humbled by a swarm of legal entanglements in recent years.
But Deutsche is not out of the woods yet, after acknowledging last month that revenues will likely be flat this year rather than enjoying the slight increase previously forecast.
Sewing remains convinced that he can increase the bank’s return on equity — a measure of profitability — to four percent this year and 10 percent “in the mid-term” — compared with just 0.5 percent in 2018.
– Trump’s bankers –
Beyond high costs and uncertainty over revenue growth, Deutsche’s image has been soiled by years of scandal, and continues to suffer regular new mud splatters.
Last June its American branch failed stress tests imposed by the Federal Reserve, which highlighted its weakness in the face of a potential future financial crisis.
In September, German financial markets watchdog Bafin ordered auditors KPMG to check the bank’s progress on anti-money-laundering measures.
Board member Sylvie Matherat, in charge of compliance issues, came in for hefty shareholder criticism on Thursday.
And in November, the bank’s Frankfurt HQ was searched as part of yet another money-laundering probe triggered by the “Panama Papers” media leaks, scandalising clients.
Just this week Deutsche admitted an error in software it uses to verify payments by major clients had hindered its anti-money-laundering efforts, in the latest blow to the image of its digital infrastructure.
Meanwhile in the US, the bank must serve up details of its business relationship with President Donald Trump to Congress.
It was one of the only lenders to keep offering him credit after his repeated bankruptcies in the 1990s.
“Mr Sewing, you told us last year that we would be bored in future. I don’t want to know what things will look like when it gets exciting,” joked Nieding.
Shareholders’ votes on the executive and supervisory boards will be unveiled later Thursday.
Disclaimer: Validity of the above story is for 7 Days from original date of publishing. Source: AFP.