Deutsche Bank CEO’s Support Erodes at Shareholder Meeting
Deutsche Bank CEO’s Support Erodes at Shareholder Meeting
(Bloomberg) -- Deutsche Bank AG’s top leadership felt the heat of shareholder ire as investors withheld their backing for executives and several urged the chairman to step down early at a tense meeting in Frankfurt.
Chairman Paul Achleitner, 62, bore the brunt of the backlash as a succession of frustrated investors rose up to complain at the dismal performance of Deutsche Bank’s shares, which hit a fresh record low before the annual general meeting on Thursday. While investors still backed him with 72% of the share capital at the meeting, that’s down from more than 84% last year. Support for CEO Christian Sewing also slumped -- to 75% from near unanimity.
Under the 110-year-old dome of one of Frankfurt’s most prestigious concert halls, it was the the turn of the masses to have their say while the largest shareholders -- think the Qatari royal family and Cerberus Capital Management -- remained out of the limelight. Those who spoke largely expressed anger and disbelief that what was once among Europe’s dominant banks has a market value that would make it the fifth-biggest in France. One noted that the price for a share had fallen below the cost of a pack of cigarettes.
“Mr. Achleitner, the restructuring of the bank hasn’t been completed and profitability continues to be something to be desired despite multiple management changes over the past seven years,” said Andreas Thomae, a portfolio manager with Deka Investment, a top investor in Deutsche Bank who planned to vote against the supervisory board actions.
While smaller investors shouted their grievances from the rooftops, larger shareholders had been quietly considering a post-Achleitner future out of the limelight. They’ve discussed ways for the chairman to find a successor before his term ends in 2022, people familiar with the matter have said. Detractors point to multiple turnaround efforts by three different management teams that largely failed in recent years. Since the the former Allianz SE finance chief took over in 2012, the shares have lost about three-quarters of their value.
German Pope
One investor asked why the German pope resigned, yet the Austrian Achleitner doesn’t. Another said they would withhold support for the chairman, though didn’t want him to step down to avoid a power vacuum. A third recited his own poem to vent his frustration.
CEO Sewing -- little more than a year into the job -- also received a rough ride from investors, receiving 75% of votes, down from 95% a year ago. At the meeting, he announced plans for “tough cutbacks” to the investment bank in a campaign to restore market confidence following the breakdown of takeover talks with Commerzbank AG.
“I can assure you: we are prepared to make tough cutbacks” to the securities unit, Sewing said. The CEO said he’s “rigorously focusing” on building up profitable and growing businesses.
Garth Ritchie, the head of the investment bank, received just 61% of votes, as did Sylvie Matherat, who oversees the business responsible for anti-financial crime measures and compliance. While the votes don’t have immediate consequences, they amount to a sign of low confidence in management. Commerzbank CEO Martin Zielke, by comparison, on Wednesday received the backing of 99.8% of votes at that bank’s AGM.
Achleitner is seen as a backer of a large investment banking unit at Deutsche Bank, having advised the lender on its Wall Street expansion in the 1990s when he was an investment banker at Goldman Sachs Group Inc. But new regulations after the financial crisis have made the business costlier, while negative interest rates in Europe erode other sources of income. Since he took over as chairman, Deutsche Bank has made a series of smaller cutbacks to the securities unit, while shying away from more decisive measures.
Achleitner said while he had made mistakes, he was not “the root cause of all evil.” He opened the meeting by assuring Sewing, whom he installed last year after a bitter boardroom battle with his predecessor, of his full backing.
Sewing didn’t say where the cuts to the investment bank would be, but he highlighted businesses where they’re unlikely to happen, such as origination and advisory as well as as foreign exchange, global credit trading and U.S. commercial real estate. He didn’t mention equities trading, an omission that was intentional, a person familiar with the matter said.
To contact the reporters on this story: Steven Arons in Frankfurt at sarons@bloomberg.net;Nicholas Comfort in Frankfurt at ncomfort1@bloomberg.net
To contact the editors responsible for this story: Dale Crofts at dcrofts@bloomberg.net, James Hertling
©2019 Bloomberg L.P.