Deutsche investors vent anger over lender’s ‘10 lost years’
Deutsche Bank came in for stinging criticism from shareholders angry at a decade of painful share price falls, lacklustre returns and high misconduct charges, as its annual meeting got under way in Frankfurt yesterday. Germany’s biggest bank endured a turbulent 2016, culminating in a dramatic sell-off in its shares in September, as investors fretted over whether Deutsche had sufficient capital to meet a penalty demanded by US authorities for its alleged mis-selling of mortgage-backed securities in the run-up to the 2007 financial crisis.
Deutsche has since settled with the US for far less than feared, and in April raised €8bn in capital in a bid to lay to rest fears over its financial stability.
But at the bank’s annual meeting, shareholders expressed a litany of frustrations with Deutsche’s performance.
Klaus Nieding, from the DSW shareholder association, said Deutsche had endured “10 lost years”.
“The tragedy of the situation is that . . . for the most part, our rivals dealt with the consequences of the financial crisis far more quickly, and . . . were able to focus on building up their operating businesses again,” he said. “In contrast . . . we are searching for the right strategy for the future.”
Ingo Speich, portfolio manager at Union Investment, one of Deutsche’s top 25 investors, said the bank’s top brass had done “a good job in a very difficult year”, but the development of the share price was a “disaster”, and that there was a “huge gap between Deutsche Bank’s pretensions and reality”.
“We have the impression that some parts of the new strategy were drawn up on the fly, and rely on overly optimistic assumptions,” he said. “How do you plan to win back market share in investment banking? How will you become more profitable in the traditionally very competitive and low margin German retail banking business?
“A strategy that is worthy of the name should also last longer than 12 months,” he added, in reference to Deutsche’s frequent strategic adjustments. “The most important thing now is that calm returns to the bank, so that its staff can become more focused on customers again.”
Paul Achleitner, who is standing for a second five-year term as chairman, acknowledged that Deutsche’s staff had been “tested as never before” last year, but said he hoped 2016 would prove a “turning point”. “Significant challenges remain. But our self-inflicted problems have been addressed and are being systematically remediated,” he said.
John Cryan, chief executive, said the capital increase had given Deutsche the firepower to return to growth, and that he was working to restore its reputation. “Deutsche Bank should once again stand for integrity and credibility — for me that objective is not negotiable.”
Mr Achleitner also said Deutsche was taking “extensive legal advice” on whether former management board members bore “personal or collective responsibility” for misconduct during their period in office.
“So far no definitive conclusion has been reached. However . . . the supervisory board expects that in the coming months, there will be an arrangement which ensures that the individuals involved make a substantial financial contribution,” he said.