ADVERTISEMENT

Deutsche Bank Advisory Contract With Cerberus Is Set to Lapse

Deutsche Bank Advisory Contract With Cerberus Is Set to Lapse

(Bloomberg) -- Deutsche Bank AG’s controversial advisory contract with Cerberus Capital Management LP probably won’t be renewed when it expires at the end of this month, people familiar with the matter said.

The German lender last year hired a unit of the U.S. private equity firm, which is one of Deutsche Bank’s largest shareholders, to help it identify savings and improve liquidity management. The mandate, overseen by Cerberus President Matt Zames, raised concerns that the U.S. investor may gain access to privileged information that other shareholders don’t have.

To help ease such concerns, Cerberus was banned from buying or selling Deutsche Bank shares for the duration of the mandate.

“Cerberus Operations and Advisory Company has been a great support since mid-2018 and helped us to get our deep transformation going,” a Deutsche Bank spokesman said in a statement. “Now it is all about execution.”

Cerberus separately praised Deutsche Bank Chief Executive Officer Christian Sewing’s performance without providing further details on the mandate. “We remain confident in his team’s ability to execute on the restructuring plan to improve the bank’s financial and operating performance.”

Deutsche Bank is the most high-profile among several investments Cerberus has made in Europe’s beaten-down bank stocks. It’s also an unusual one because as a minority shareholder with about 3% of the voting rights, the firm can’t control the lender or take it private as buyout firms typically do, limiting its options to boost the value of the holding.

Deutsche Bank’s share price has dropped by more than half since Cerberus first announced taking a stake in November 2017. The firm also holds a 5% stake in Commerzbank AG, the second-largest listed bank in Germany. That stock has lost almost half of its value since the investment was first announced.

Cerberus had backed merger talks between both German lenders earlier this year, according to people familiar with the matter, but those discussions ultimately failed.

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, Ross Larsen, Christian Baumgaertel

©2019 Bloomberg L.P.