Investors refuse to buy back shares from Deutsche Bank

Annual General Meeting of Deutsche Bank 2019

There will not be that much closeness between CEO Christian Sewing (left) and Supervisory Board boss Paul Achleitner at this year’s online general meeting of Deutsche Bank.

(Photo: dpa)

Frankfurt Lots of questions, little folklore – measured by the usual drama, the online general meeting of Deutsche Bank should be unusually sober. Shareholders had to submit questions and comments before the shareholders’ meeting. The sometimes curious performances in front of the assembled shareholder audience are no longer required for Corona this year.

After the speeches by supervisory board chairman Paul Achleitner and CEO Christian Sewing, which the bank had already published in advance, the previously submitted questions from investors are read out and answered. A total of 54 shareholders took advantage of this opportunity and asked 366 questions.

Some fund companies and shareholder representatives made their statements public at the beginning of the week. The general weather situation is thus known – and the conflicts ignite essentially on two agenda items – share buybacks and personal details. Several shareholder representatives criticize the agenda item, which allows the bank to buy its own shares. The institute wants to be approved to buy up to ten percent of its own share certificates. Such a stock decision is necessary, among other things, to pay employees part of their bonuses in shares.

The fund companies Deka and Union Investment as well as the German Association for the Protection of Securities (DSW) have announced that they will vote against it. Union Investment rejects “fundamentally share buyback programs,” said fund manager Alexandra Annecke of Union Investment.

DSW Vice President Klaus Nieding bases his resistance on the fact that the bank must keep liquidity and capital together in the current situation. Therefore, in the figurative sense, it is imperative to “keep the powder dry”.

A significant number of shareholders who want to refuse to discharge the board of directors or the supervisory board do not appear to be in sight this time. The American voting rights adviser ISS supports Deutsche Bank in all agenda items, Deka and Union Investment want to keep it as well. Only shareholder adviser Glass Lewis speaks out explicitly against the discharge of the supervisory board chairman Paul Achleitner and the departing board members Sylvie Matherat and Garth Ritchie.

Permanent consequences of the corona crisis

Of course there is not so little potential for conflict. After all, the corona pandemic caught the bank in the middle of the renovation. “In this phase of upheaval, we have to make our bank even more weatherproof – or better said: stormproof,” admits CEO Sewing in his previously published speech. And Chairman of the Supervisory Board Paul Achleitner warns: “The corona crisis will not only last longer than initially expected – it will also have lasting consequences.”

From fund manager Annecke’s perspective, the bank is “not well equipped for a deep recession”. You could not imagine “how Deutsche Bank wants to achieve its earnings and return targets given the economic impact of the corona crisis.” Her conclusion: “The restructuring of the bank should have come much earlier in order to strengthen profitability in good time through cost reduction measures. Now weak profitability is the biggest Achilles’ heel. ”

But that is not the unanimous opinion of the financial center. Deka fund manager Andreas Thomae, for example, believes that the bank will “get through the crisis well with its moderate credit risk profile and good diversification”.

The candidacy of Deutsche Börse chief Theo Weimer for the bank’s supervisory board was also hotly debated in advance. Not because someone thought Weimer was unqualified, but because he held too many offices for the taste of some investors. Weimer has already left the supervisory board of 1. FC Bayern, but remains committed to his election to the supervisory board of Knorr Bremse. And he leaves open the question of whether he could resign from the board of directors at Deutsche Börse in two years to succeed Achleitner as head of the supervisory board. However, Weimer does not have to worry about his vote result, because critics of his office policy, such as Union Investment or Deka, also want to vote for him.

So the question remains whether the next physical shareholder meeting next year will be in Frankfurt or in another big city with more than 500,000 inhabitants. The bank wants to change its statutes in order to be able to choose its meeting place more flexibly. Some shareholders have already criticized it.

More: Fund manager Alexandra Annecke “Deutsche Bank is not well equipped for a deep recession”.

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