Deutsche Bank shareholder demands dismissal of AR boss Achleitner

Paul Achleitner

A critical shareholder has been calling for the chairman of the supervisory board to be dismissed for years.


(Photo: dpa)

Frankfurt Every year: the general meeting of the German bank on May 20, according to the will of the critical shareholder Karl-Walter Freitag, another vote on the dismissal of the supervisory board chairman Paul Achleitner should take place. Friday also demands, among other things, that CEO Christian Sewing withdraw his trust and cut the remuneration for the members of the Supervisory Board, as is apparent from Reuters’ request for amendments to the agenda.

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Stock exchange chief Weimer becomes a member of the supervisory board of Deutsche Bank

Deutsche-Börse boss Theodor Weimer moves into the supervisory board of Deutsche Bank. The 60-year-old is to succeed Katherine Garrett-Cox (52), who will resign from the 2020 Annual General Meeting, Deutsche Bank said on Friday. According to insiders, Weimer is considered a potential candidate to succeed Paul Achleitner, who wants to stop in 2022.

In January, Deutsche Bank nominated ex-SPD boss Sigmar Gabriel for its supervisory board. Gabriel was legally appointed as a supervisory board in March and will also stand for election at the shareholders’ meeting.

Weimer has been CEO of Deutsche Börse since January 2018. The former head of Hypovereinsbank had taken over the management of the exchange operator after a turbulent year: In 2017, the planned merger of Deutsche Börse and the London Stock Exchange (LSE) failed; a compensation program tailored to the then CEO, Carsten Kengeter, investigated the Frankfurt prosecutor’s office for possible reasons Insider trading after itself. Weimer made the turnaround and most recently reported a billion profit for 2019.

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The head of Deutsche Börse is to become the supervisory board of Deutsche Bank

Frankfurt The Deutsche Bank wants the CEO of the German stock exchange, Theodor Weimer, be elected to the Supervisory Board. Weimer is to replace Katherine Garrett-Cox, who will step down at the shareholders’ meeting, like Deutsche Bank with publication of their annual report announced.

“With Theodor Weimer, who is to move into the supervisory board, we gain an expert in the German and European financial industry and an outstanding banker for the supervisory board of Deutsche Bank”, said Paul Achleitner, the chief controller of the bank.

The personnel is significant: With Weimer, a candidate has been moving into the bank’s supervisory board for the first time in a long time, which has the format to replace Achleitner at the head of the committee after his contract expires in spring 2022.

However, it is also clear that Weimer would have to give up his senior position at Deutsche Börse early if he wanted to become chief controller of Germany’s largest money house. “As long as Mr. Weimer is chairman of the board of the German stock exchange, a position as head of the supervisory board is out of the question,” said a spokeswoman for the stock exchange. Weimer should move as a simple member to the supervisory board of Deutsche Bank, she emphasized. “The question of the chairmanship of the supervisory board does not currently arise.”

According to financial circles, Weimer received the green light from the head of the German Stock Exchange, Joachim Faber, for the candidacy for the Deutsche Bank supervisory board. Within the company, many hope that the CEO will fulfill his contract, which will run until the end of 2024 – after all, he only extended the contract in mid-February.

Experts warn of conflicts of interest

Weimer is very well connected in politics and the financial sector. He also worked for many years in management positions at banks, for example as head of the UnicreditSubsidiary Hypo-Vereinsbank or as a partner of Goldman Sachs in investment banking.

For experts, there is no question that he, as a member of the Supervisory Board, is a technical asset for Deutsche Bank. “Even if I do not like to comment on names, but it is an excellent choice !!!”, banking professor Sascha Steffen commented on Twitter. “We see Mr. Weimer’s nomination as fundamentally positive, because he has the necessary industry expertise and a high reputation,” said Vanda Heinen, an analyst specializing in corporate governance at Union Investment. “In order not to be accused of accusing the office, Mr. Weimer should resign from the supervisory board of FC Bayern Munich,” she warned.

Other experts warn that there may be conflicts of interest because Deutsche Bank is a major customer of Deutsche Börse. As head of the stock exchange, Weimer is very interested, for example, that Deutsche Bank will in future process more derivatives transactions in Frankfurt than in London.

“Theodor Weimer is undoubtedly an asset to the Supervisory Board of Deutsche Bank. But as long as he is the head of Deutsche Börse, this is a crystal-clear conflict of interests, ”said Ingo Speich, head of sustainability and corporate governance at Deka Investment, the Handelsblatt. The head of the exchange must be as neutral as possible.

It is unclear whether and how this finding will affect Deka Investment’s voting behavior at the Annual General Meeting. “We are examining whether and what that means for our voting behavior at the Deutsche Bank Annual General Meeting,” said Speich. Deka is one of the top 20 investors in Deutsche Bank.

“The question of a possible conflict of interest should have been clarified in advance with the supervisory authorities so that the Zeltner case does not repeat itself,” said Union Investment expert Heinen. Financial circles say that Deutsche Bank discussed the personnel with the supervisors before the announcement. In addition, the stock exchange is not a direct competitor of Deutsche Bank, so any conflicts of interest can be managed without major problems. A taste would probably still remain with some decisions.

Deutsche Bank has recently had bad experiences with conflicts of interest on the Supervisory Board. Jürg Zeltner, former head of wealth management at UBS, had to say goodbye to the control committee again after a few weeks. The supervisors had put pressure on him because Zeltner worked as a boss and investor at the Luxembourg private banking group KBL for a direct competitor of the Frankfurt money house.

The rumor that Weimer could one day succeed Achleitner has been circulating in Frankfurt for many months. When Weimer was contacted internally at Deutsche Börse, he reacted annoyed. At the annual press conference in February, he said he hadn’t thought about what to do after his contract expired in 2025. “I don’t have that much strategic thinking on my own behalf.”

The top earner receives 13 million euros

Weimer joins Deutsche Bank in a phase in which it is part of the largest corporate restructuring in its history. 18,000 jobs are to fall victim to this. The bonus pool for employees has also been reduced. The bank will pay a total of 1.5 billion euros in bonuses to its approximately 88,000 employees for the past financial year, as the bank’s annual report shows. That is around 22 percent less than the 1.9 billion euros for 2018.

However, Deutsche Bank has already fired many of the usually high-paying investment bankers. This is another reason why the bank has 583 fewer income millionaires than a year ago. At that time, 643 employees received total remuneration of more than one million euros.

A German banker – who is not mentioned by name in the annual report – no longer has to worry about the unpredictable consequences of the corona virus for Deutsche Bank and the entire financial industry: his total remuneration for 2019 amounts to more than 13 million euros.

The total salary of the anonymous top earner is thus as high as the total variable remuneration of the Executive Board in the past year. Despite the loss of billions in 2019, the bank’s management board will receive a total bonus of EUR 13.3 million, which is around half as much as in the previous year when the top managers received EUR 25.8 million in bonuses. Including fixed salary and allowances, the board of directors received 34.8 million euros from CEO Christian Sewing after 52.2 million in the previous year. Sewing itself received five million euros – two million less.

There will be no vote on the remuneration system at the Annual General Meeting this year. This is due to the new shareholder rights guideline, which only came into force in December 2019 and necessitates adjustments to the remuneration system. At the 2021 shareholders’ meeting, the Supervisory Board will then let the shareholders vote again on the compensation structures.

Little news about Corona

The statements made by the bank in its annual report on the corona crisis and its economic impact were less informative than the personnel decisions. The term Covid-19 occurs exactly 31 times on the 517 pages. However, the letter from CEO Christian Sewing only says: “The positive trend of the fourth quarter of 2019 continued at the start of the year. However, what the Covid 19 pandemic means specifically for the global economy and for our bank cannot be predicted at this point in time. ”

The bank’s perspective is at least a little more specific. The money house there warns that “we can be significantly affected by a sustained downturn in local, regional or global economic conditions”. Given the uncertainty about the spread, duration, and market impact of Covid-19, the forward-looking assumptions currently did not take into account any potential impact.

In the past year, the radical reconstruction caused a loss of 5.7 billion euros. Sewing had promised investors a black zero for operating profit in 2020, but that was before the pandemic questioned all plans.

More: Deutsche Bank under stress: Corona crisis makes conversion a race against time.

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The corona virus as a party crasher at Deutsche Bank

Frankfurt The Berlin Philharmonic Orchestra with works by Beethoven and Prokofiev, President Frank-Walter Steinmeier as guest speaker and then a lavish party with 1,200 guests from politics and business. That’s how it was Deutsche Bank presented the ceremony for her 150th birthday in the concert hall on Gendarmenmarkt. The buzz in the capital should bring back a bit of the glory of the old days, polish up the image of Germany’s largest money house, symbolize the restart.

But the rapid spread of the coronavirus has destroyed these birthday plans. If the federal government strongly advises against major events, then Deutsche Bank cannot deviate. “This decision was very difficult for us,” write CEO Christian Sewing and Supervisory Board Chairman Paul Achleitner in the rejection to the guests.

Whether the ceremony will be rescheduled – completely open. The bank is currently planning from day to day. And behind the scenes, there is growing nervousness that Corona could ruin much more than just the celebration.

The strategy with which Sewing took up was sharply calculated from the start, so sharp that nothing unforeseen could happen. The big question now is: are the bank’s defenses strong enough to cope with the economic consequences of the corona pandemic?

Back in crisis mode, it could be called again. As so often in previous years.

Just a few weeks ago, Deutsche Bank looked revitalized. Earnings level: stabilized, albeit at a low level. The share: a worthwhile investment, for a short time the security again cost more than ten euros.

And there was a new, very respectable name among the major shareholders with a long-term investment strategy: the California Capital Group. All of this no longer made the broad shareholder community dream of a turn for the better, the turnaround actually seemed to be coming true.

But since mid-February, the stock has been rushing down again and exploring new lows. Hedge funds have long since rediscovered betting against the bank as a lucrative business. And the risk premiums on the derivatives market signal that investors are becoming increasingly alert.

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The erratic ups and downs on the stock market show how quickly confidence in Deutsche Bank can wane again. The institute once made history as the financier of the Baghdad Railway, the heart of Deutschland AG or simply the largest bank in the world. Now, just in the anniversary year, a new low of the share is making headlines: 4.87 euros. This is less than a day ticket for the subway in Frankfurt.

Worried about the black zero

Not even the greatest optimists among analysts still believe that the bank can increase its earnings to between € 24 billion and € 25 billion by 2022 and achieve a return of eight percent. Fund manager Alexandra Annecke of Union Investment, one of the bank’s larger shareholders, speaks cautiously of a “very ambitious goal”.

Fear of a global recession has long since overtaken the delicate confidence of January. “Actually, you have to assume every day that Deutsche Bank issues a profit warning and revises its goals,” says a large institutional investor.

The bank can only hope that the financial professionals underestimate the institution. Because since Sewing took office in April 2018, the renovation has always been a race against time. “We are late in the business cycle,” said Stuart Graham, co-founder and partner of the renowned London-based analysis company Autonomous.

The corona crisis now threatens to further shorten the time that the bank has left for the restructuring. “If there is a recession and Deutsche Bank still only achieves low single-digit yields by then, it will quickly be in the red again.”

This is what makes the corona virus so dangerous for the bank. Red numbers could quickly raise concerns among investors whether a further capital increase is not necessary.

That would be the ultimate horror scenario, because the most recently used financial resources have had no effect from the point of view of critics: Since the financial crisis in 2008, Deutsche Bank has collected almost 30 billion euros in fresh money from investors – and at the same time spent 18 billion on fines.

The trip to international investment banking, which led the bank under the leadership of Rolf Breuer at times on par with the major addresses on Wall Street, drove the share price, dividends and remuneration for board members and investment bankers to record highs for a few years. However, the success was expensive, the risks on the balance sheet increased.

Several penalties that the bank has paid in the recent past go back to the era of Josef Ackermann – with his investment banking chief Anshu Jain. There were questionable US mortgage deals, windy stock deals with Russian oligarchs, and manipulations of key benchmark interest rates, such as the Libor, which is the basis of many deals in the global financial markets. The fact that Jain, together with Jürgen Fitschen, was even allowed to run the bank from 2012 to 2015 as a co-boss caused irritation not only for the regulatory authorities, but also for many customers.

“Trust is the beginning of everything,” it said 25 years ago in a commercial of the bank. But only under the sober analyst John Cryan, who replaced Jain, did this trust slowly come back. The fact that Cryan called the bank’s problems unusually open, but did not solve them, ultimately cost him the job.

So now it should be sewing. The Westphalian should lead the bank back to business with corporate and private customers. The institute took a lot of time for this self-discovery; more time than all competitors. Deutsche Bank sold off the fat years in which the economy in Europe and the domestic market was booming with changing bosses and variable priorities.

“A bit bogged down”

“We were a bit bogged down with previous strategies,” admits Fabrizio Campelli. The board member sits in a barren conference room of Deutsche Bank in London and is connected to Frankfurt by video, a golden winking cat peeks over his shoulder from behind. Campelli may not fly because of Corona these days. Deutsche Bank has drastically restricted business trips because of the risk of infection.

Campelli joined Deutsche Bank when it was still managed by Ackermann. The 47-year-old has been responsible for transformation and human resources on the board since January and has to provide solutions for everything that was not tackled by Sewing’s predecessors.

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