(Reuters) - Deutsche Bank faces a potential shareholder revolt on Thursday as discontent with management grows following record fines, lagging profits and a restructuring plan criticised as too little, too late.
Top managers could suffer a painful rebuke when shareholders vote whether to approve their 2014 performance at the company’s annual meeting.
The mood among investors is souring. Some have called supervisory board chairman Paul Achleitner directly to complain, shareholders told Reuters on condition of anonymity.
“There is no benefit of the doubt,” said one major shareholder who asked not to be named. “Up to now they’ve promised a lot but they haven’t delivered.”
Any rebellion would increase the pressure on the bank’s two chief executives, Juergen Fitschen and Anshu Jain, who have been in charge since 2012.
The pair have been lobbying shareholders intensively since late April when the bank’s new strategic plan fell short of expectations and sent its shares plunging.
Germany’s flagship lender has trailed rivals under the tenure of Jain and Fitschen who stuck to an expensive universal banking model offering everything from mortgages in Germany to derivatives in London.
Now faced with tough regulations, weak markets and mounting bills from misconduct settlements, Deutsche is following rivals such as UBS and Barclays in axing unprofitable business lines to boost earnings and shore up its balance sheet.
However, investors are running out of patience. Another top-10 investor told Reuters he simply didn’t trust management to deliver on renewed promises to cut costs.
“They’ll say anything depending on what they need to say,” said a third shareholder, this one among the top-20 owners.
Investor doubt is evident in the bank’s market capitalisation, which at 0.56 times book value, makes Deutsche the lowest-valued stock among nine rivals including Credit Suisse or Barclays, according to Thomson Reuters data.
THUMBS DOWN
Some shareholders have said they will vote against a standard agenda item approving of management’s annual performance.
Already, shareholder advisory firm ISS has recommended that Deutsche Bank investors should withhold their backing and deliver an embarrassing reproach after record fines in the United States and Britain.
Failure to win the requisite 50 percent support for performance in 2014 could leave management open to future legal claims that it failed to act appropriately.
It would intensify pressure to reform a bank that has been plagued with over 9 billion euros ($10.21 billion) in fines or settlements since 2012 alone.
The rising criticism has already put the bank’s management on the defensive, with both CEOs recently saying they had no plans to step down.
“The best I can do is solve the problems of the bank and improve its performance,” Jain told newspaper Frankfurter Allgemeine Sonntagszeitung on Sunday. “This mission is not yet complete.”
Jain is burdened by the perception that he hasn’t thoroughly reformed the investment bank that he oversees.
Fitschen is burdened by what promises to be a lengthy court trial where prosecutors accuse him of attempting to mislead investigators in a long-running battle with the heirs of the Kirch media empire.
Achleitner, who oversees management, will be closely watched for any sign that his support for the duo is waning. Some media have interpreted his recent comments as a sign his patience with Fitschen and Jain is beginning to wear thin.
($1 = 0.8816 euros)
