By Eyk Henning
FRANKFURT-- Deutsche Bank AG's Co-chief Executive Anshu Jain
appears set to survive a contentious shareholder vote at the bank's
annual general meeting Thursday.
Mr. Jain looks poised to remain in the co-CEO post, despite loud
objections from some investors and the ousting of several senior
executives in a bid to appease increasingly restive
shareholders.
At the AGM several large shareholders and investor associations
questioned Mr. Jain's ability to restore Deutsche Bank's
profitability and reputation after a series of scandals, saying
they wouldn't vote in approval of the management's actions over the
past year later Thursday. But the vote is nonbinding and a majority
of shareholders are expected to vote in favor of the management of
Messrs. Jain and his co-CEO Jürgen Fitschen.
The bank's supervisory board, led by Chairman Paul Achleitner,
late Wednesday agreed on a management reshuffle in which Mr. Jain
takes on responsibility for the bank's strategy and implementation
of a EUR3.5 billion ($3.88 billion) cost savings program--a focal
point of recent criticism. While the move elevates Mr. Jain's role,
it also puts the India-born U.K. citizen under more pressure to
deliver the promised savings.
In April Deutsche Bank announced the cornerstones of a new
strategy to boost profitability and its share price, both of which
have lagged behind major rivals and ignited shareholders' anger.
However, investors were disappointed by a lack of detail on the
cost savings and some urged Mr. Achleitner to reassess his top
personnel to turn the bank around. Mr. Achleitner told The Wall
Street Journal in an interview last week that he was sensitive to
what shareholders think, but stopped short of unconditionally
supporting his top executives.
To avoid becoming the latest in a string of European bank CEOs
ousted in recent months, Mr. Jain must now show he can quickly
deliver promised results. Mr. Achleitner told the Journal that it
will be crucial for management to successfully implement the new
strategy.
Shareholders remained wary Thursday.
"The fact that you want to take care of implementing the
strategy yourself now, Mr. Jain, is an overdue step," said fund
manager Ingo Speich from Union Investment, adding "the time of
excuses [for missing targets] is over. You need to deliver
now."
Mr. Achleitner put his management team in the hot seat Thursday
by allowing shareholders to vote on the actions of individual
executives, rather than just voting on the entire management team's
performance. The bank also allowed such a vote last year, which is
somewhat unusual in Germany.
Mr. Jain admitted Thursday that he was dissatisfied with cost
savings delivered so far and pledged to make that a top priority in
the coming years. He also acknowledged that "resolving legacy
litigation matters has taken longer, and been very costly...be
assured: we are doing everything we can to resolve the outstanding
issues."
The bank shelled out around EUR8.7 billion in fines over the
last three years according to Union Investment's Mr. Speich, and
some investors argue that Mr. Jain should step down because he was
head of the investment bank at that time, which bore the bulk of
Deutsche Bank's legal woes. "Mr. Jain, are you the solution to the
problem or part of it?" asked Hans-Martin Buhlmann from the
shareholder association VIP.
Deutsche Bank paid a record $2.5 billion fine to settle U.K. and
U.S. investigations on the manipulation of interbank lending rates,
better known as Libor. As part of the Libor settlement with the
U.K., Britain's Financial Conduct Authority criticized Deutsche
Bank for "repeatedly misleading us."
Deutsche Bank in reaction late Wednesday announced the departure
of two senior executives who were linked to the Libor scandal. Alan
Cloete, who is now co-head of the Asia Pacific region and who
oversaw the bank's Libor submissions at the time of the attempted
manipulation, and Colin Grassie, head of the U.K. business, will
soon leave.
Hans-Christopher Hirt of U.K.'s Hermès fund said Thursday he
welcomes the changes to the bank's management board, but questioned
whether they suffice, adding that he wouldn't approve of the
board's actions.
Despite hefty criticism at the AGM, Mr. Jain said last week he
was confident that a majority of shareholders would back him.
Deutsche Bank's top two shareholders--asset manager BlackRock Inc.
and the holding of Qatari Sheik Hamad Bin Jassim Bin Jabor
Al-Thani--are expected to vote in favor of the management.
The two of them together hold more than 10% of the bank's
shares. That represents a signification portion of the capital
present at the AGM because only 33% of the bank's investor base are
registered to vote.
Madeleine Nissen
in Frankfurt contributed to this article.
Write to Eyk Henning at eyk.henning@wsj.com
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