Deutsche in­vestors vent anger over lender’s ‘10 lost years’

Financial Times USA - - COMPANIES - JAMES SHOTTER — FRANKFURT

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.

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