Deutsche Bank's Achleitner Can't Dodge Blame for Latest Woes

(Bloomberg) -- John Cryan took the fall, but the man who pushed Deutsche Bank AG’s former chief executive officer, Chairman Paul Achleitner, is under fire for his part in the upheaval at Europe’s largest investment bank.

Achleitner, 61, faces a rough ride at Deutsche Bank’s annual shareholder meeting in May from investors who say he’s as much to blame as Cryan for the lender’s woes. The depth of displeasure means that one of Germany’s leading financiers of the last two decades looks set to emerge a diminished figure from this latest drama.

Deutsche Bank's Achleitner Can't Dodge Blame for Latest Woes

Deutsche’s shares are so broadly dispersed that a coordinated revolt against Achleitner at the May 24 meeting is unlikely, though the bank’s largest investors are dissatisfied with his performance, according to people familiar with their thinking.

Discontent was already bubbling at the board meeting on Sunday evening when the decision was made to remove Cryan, according to people familiar with the discussion.

Achleitner faced criticism from two board members, not just for his inconsistency over the bank’s strategic direction, but also for the two weeks of leaks about his hunt for a new CEO, his failure to find credible external candidates and his choice of Garth Ritchie as head of the investment bank, the people said.

‘Strategic U-Turns’

Achleitner “hand-picked John Cryan in mid-2015,” said Hans-Christoph Hirt, head of Hermes EOS, which advises on more than $336 billion in assets under management worldwide. “He was closely involved in the development of Deutsche’s current strategy. He has also overseen a number of strategic U-turns, not least regarding the bank’s retail business and asset management.”

In the press release announcing the appointment of Christian Sewing as Deutsche Bank’s new CEO, Achleitner had called for a “new execution dynamic in the leadership of the bank,” suggesting that Cryan was shown the door for his inability to carry out the strategy approved by Achleitner and the rest of the board.

In an interview with Frankfurter Allgemeine Zeitung Monday, Achleitner said that "strategic and operational responsibility lies with the management. The job of the supervisory board is to monitor whether the strategy is being implemented, to advise and, if necessary, to draw consequences for personnel."

The bank can’t solve its broader issues by changing a couple of faces, according to Kian Abouhossein, an analyst with JPMorgan Chase & Co.

“What matters, and in our view Deutsche has been missing for several years now, is a clearly defined strategy, a commitment by all parties to the direction the bank will be going in” and a focus on execution, with consequences when goals aren’t reached, Abouhossein wrote in a note to clients.

And that could apply to Achleitner as much as to anyone else at the bank.

“He’s been in office since 2012 and, as it turns out, has made a lot of bad decisions,” said Andreas Meyer of Aramea Asset Management in Hamburg, who manages about 1.4 billion euros of fixed income securities including Deutsche Bank and Postbank subordinated bonds. “He should carry the responsibility for that and leave,” though that probably won’t happen, he said by email.

©2018 Bloomberg L.P.