By Eyk Henning
FRANKFURT-- Deutsche Bank AG's co-chief executives Anshu Jain
and Jürgen Fitschen face intensified pressure to quickly present
details of their strategy for turning the German giant around after
a stinging rebuke from shareholders at Thursday's annual
meeting.
Only 61% of the investors present at the AGM voted in approval
of the management team's work. One year ago the figure was 89%.
Many investors said Thursday they had lost trust in Deutsche
Bank executives because they failed to achieve promised financial
targets and the bank also faces costly lawsuits.
The bank last month paid a fine of $2.5 billion to settle U.S.
and British charges that it manipulated interest rates.
Deutsche Bank shares traded down 2.56% at EUR28.90 Friday
afternoon, continuing a slide since Messrs. Jain and Fitschen
presented fundamentals of their new strategy late last month.
Many investors on Thursday criticized the CEOs for setting
profitability targets for 2020, which shareholders said was too far
in the future. Investors also said the plan's goal of cutting costs
by EUR3.5 billion ($3.89 billion) lacked detail and
credibility.
The bank has pledged to flesh out details of its plan within 90
days, which means by late July. Investors were hungry for
information sooner.
The spotlight now narrows on Mr. Jain. In a surprise reshuffle
of the management board late on Wednesday ahead of the AGM, he was
made responsible for implementing the cost savings and the new
strategy.
Deutsche Bank's Chairman Paul Achleitner told The Wall Street
Journal last week that the management team had to successfully
implement the new strategy.
Mr. Jain faces an uphill battle overcoming skepticism among
investors and analysts, Thursday's vote indicates.
Still, some analysts predict Mr. Jain can deliver. J.P. Morgan
analyst Kian Abouhossein met with Mr. Jain following the strategy
presentation and said in a research note "we believe management has
a clear road map that will be outlined within three months"
regarding cost savings.
A second point of investor criticism is the pace of cultural
change at the bank, which has pledged to expunge an ethos that
allowed illegal activities to take place. Some investors said
Thursday that Mr. Jain should also step down because he was head of
the investment bank at the time traders sought to rig interest-rate
benchmarks. Deutsche Bank's investment bank is at the center of its
legal woes.
"Mr. Jain, are you the solution to the problem or part of it?"
asked Hans-Martin Buhlmann from the shareholder association
VIP.
Mr. Jain acknowledged that he was the "leader" of the investment
bank and therefore bears responsibility for its misconduct. But his
way of showing responsibility, he said, to remain, clean up the
bank and ensure "this never happens again."
Convincing wary investors he is the right man for the job
appears increasingly challenging for Mr. Jain and his
colleagues.
"This week has seen Deutsche Bank shareholders mount a
contentious vote of no confidence against the senior management of
the business as they question their ability to uphold the
reputation of the bank over the long term," said Alison Esse, a
managing director of The Storytellers, a change consultancy.
She added that the real problem with changing a corporate
culture is that there is often a disconnect between the CEOs'
external narrative and a company's internal ethos. The external
line is often along the lines of, "we recognize the need to change
and are changing" but the internal narrative is more along the
lines of, "this is the way we do things around here to make the
bank money." The two are often hard to reconcile, she said.
Write to Eyk Henning at eyk.henning@wsj.com
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