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Deutsche: Chairman survives vote, i-bank and regulatory chief face investor ire


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Deutsche: Chairman survives vote, i-bank and regulatory chief face investor ire

Deutsche Bank AG's shareholders gave their support to supervisory board Chairman Paul Achleitner at the annual general meeting May 23, with a 90.25% majority voting down a proposal to dismiss him.

The vote for Achleitner's removal from office, before his contract expires in 2022, was requested by shareholder Riebeck-Brauerei von 1862 AG. In the shareholder's view, Deutsche's chairman had missed the chance provided by investors at the 2018 AGM to "guide the bank onto a forward-looking path." Despite the appointment of CEO Christian Sewing and the replacement of several executive board members, "the decline of the bank has continued unchecked," the shareholder said.

Although Achleitner survived the vote, he received the lowest approval rate of the entire supervisory board, with just 71.63% of shareholders represented at the 2019 AGM voting to discharge him from liability for his actions in 2018. The approval rates for the rest of the supervisory board members exceeded 73%. A year ago, Achleitner's approval rate was 84.40%, with the rest of the supervisory board also scoring above 84%.

Approval for CEO slumps

SNL Image

CEO Christian Sewing (back) and Chairman Paul Achleitner (front) at the AGM 2019

Sewing, who took office in April 2018, won 75.23% of the represented shareholder votes at the 2019 AGM compared to the year-ago 94.58%.

Sewing told shareholders that management has delivered on his promises to keep costs low and return the bank to profit in 2018 but said further measures are necessary to complete the turnaround of the troubled group. He suggested there could be further cuts to the investment bank, given that the unit has been a particular drag on group revenues.

Amid major challenges in 2018 such as a poor stress test result in the U.S. and critical rating assessments, Deutsche achieved all of its strategic objectives and "laid the foundations for becoming a sustainably profitable bank," Sewing said. He highlighted as "severely damaging" the raid at Deutsche's offices in Frankfurt in November 2018 made in connection with the money-laundering scandal uncovered at Danske Bank A/S's Estonian unit.

I-bank head, chief regulatory officer least popular

Given Deutsche's struggles to grow investment banking revenues and the recent issues with anti-money laundering controls, it came as no surprise that the two people directly responsible for some of those areas at the bank would face more scrutiny.

The lowest support among executive board members was given to Garth Ritchie, the head of Deutsche's corporate and investment banking unit, and Sylvie Matherat, the group's chief regulatory officer. Both won only 61.41% of represented shareholder votes to discharge them of liability for their actions in 2018.

Ritchie and Matherat also faced no-confidence votes at the 2019 AGM, which were requested by shareholder Riebeck-Brauerei. However, both proposals were rejected by shareholders with a majority of more than 82%.

Shares worth a pack of cigarettes

Shareholders were also angry about the sliding share price, with some noting that the stock is now worth less than a pack of cigarettes. The stock has been in constant decline since the beginning of 2018 amid choppy markets and the numerous idiosyncratic issues that have kept Deutsche in the headlines. Doubts about the group's recovery have been growing nearly as fast as its share price has been falling.

"While further cuts for achieving sustainable profitability may be needed, the management attention remains strongly at restructuring instead of developing the business for the future," Suvi Platerink, a credit analyst at ING, said in a note May 24. "We have a cautious view of the bank's fundamentals," she said, noting that although Deutsche made a small profit for the first quarter of 2019, its revenues continue to slide.

Although the group was able to return to profit after four loss-making years in 2018, it still lost more than 60% of its market value and the share price continued to slide in 2019, hitting record low after record low. The price dropped again on May 24, trading at only €6.39 apiece on the floor of the Frankfurt Stock Exchange at 12:31 p.m. CET, down 1.39% from the prior-day close.

At the beginning of 2018, the stock was still trading at €15.95 apiece, which was more than two times higher than its level of €7.20 apiece on Jan. 2, 2019.