Frankfurt Deutsche Bank is still at the very beginning of the corona crisis. The feared wave of bad loans has not yet reached the largest domestic money house. But CEO Christian Sewing makes it clear that the bank wants to get through the pandemic without state aid.
“Thanks to our strategic realignment coupled with the solid capital and liquidity base, we see the bank in a much stronger position today than a few years ago. We are therefore well equipped to master the challenge that the current environment brings with it, ”said Sewing at the institute’s virtual general meeting on Wednesday. “So the question of a potential entry does not arise,” he replied to a shareholder’s question whether the bank would get through the corona crisis without state aid.
The 50-year-old also emphasized that the bank wanted to play an “active role” in mergers and mergers in the industry: “We have to be more profitable than today if we want to play a leading role in European consolidation.” Bank cope with a loss of 5.7 billion euros. It was the fifth consecutive annual loss.
It has not been so sober at a general meeting of Deutsche Bank for a long time. Instead of exasperated shareholders on the stage of the Frankfurter Festhalle, this time there was only a long list of questions that the shareholders had to submit beforehand and that TV presenter Doro Plutte read in turn in a kind of improvised television studio in the double towers at the Taunusanlage.
Achleitner is not seeking re-election
Chairman of the Supervisory Board Paul Achleitner, CEO Sewing, his deputy Karl von Rohr and CFO James von Moltke worked through the questions one after the other in a chord. A total of 54 shareholders asked 366 questions. One of the questions related to the future of Achleitner, Chairman of the Supervisory Board, who was elected to the control committee until the end of the 2022 Annual General Meeting. Achleitner made it clear that he was not planning to shorten his term in office. After that, however, should be the end: “I do not seek re-election. After ten years in this responsibility, there must be enough, ”he said.
After the investors put a damper on the head of the supervisory board last year, they relieved Achleitner this time with 92.99 percent of the votes cast. Bank boss Sewing was relieved with 98.86 percent – this is also significantly more than last year.
Because of the corona crisis, Deutsche Bank had to post its shareholder meeting on the Internet for the first time. The event is still not boring. After all, the pandemic caught the largest domestic money house 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.
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.”
Undercut the cost target if possible
Therefore, the bank wants to step up its savings efforts and hopes to undercut its cost target for this year if possible. The merger of Deutsche Bank’s private customer division with the parent company, which has just been completed, should also contribute to this. This saves the bank 45 million euros a year, for example by cutting 200 full-time positions, explained the Vice-President of the institute, Karl von Rohr. The merger also creates a better control environment and less complexity.
Von Rohr did not want to specify how the branch network of Deutsche Bank and Postbank will develop. “We are constantly rounding up our branch network, as in the past,” he said. Deutsche Bank also takes into account the presence of important competitors at the respective locations.
Von Rohr also made good progress in integrating Postbank into Deutsche Bank. In the past year, the bank merged the two building society subsidiaries of Deutsche Bank and Postbank and improved liquidity management. The integration enabled the bank to realize around EUR 200 million in synergies in 2019.
The signs were on relief
The discharge to the Board of Management and the Supervisory Board had emerged. The American voting rights adviser ISS supported Deutsche Bank on all agenda items, Deka and Union Investment did the same. Only shareholder adviser Glass Lewis explicitly spoke out in advance of the discharge from the chairman of the supervisory board, Paul Achleitner, and the former board members Sylvie Matherat and Garth Ritchie.
One reason for this comparatively reassuring starting point for the shareholders’ meeting is the progress the bank has made in the past few months. However, there are different opinions among the major shareholders as to whether the glass is half full or half empty.
From the perspective of Union Investment fund manager Alexandra Annecke, 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. ”
Deka fund manager Andreas Thomae, on the other hand, believes that the bank will “get through the crisis well with its moderate credit risk profile and good diversification”. Praise also comes from Filippo Alloatti of the wealth manager Federated Hermes: “Deutsche Bank’s restructuring plan is making some progress in a difficult economic environment.” Percent for the year.
Controversial personnel on the supervisory board
This year, the issues of the Supervisory Board and share buybacks are the main areas of conflict. Several shareholder representatives criticize the agenda item, which allows the bank to buy its own shares. The institute wanted to get approval to buy up to ten percent of its own shares. Such a stock decision is necessary, among other things, to pay employees part of their bonuses in shares. “The bank has used this framework only slightly in the past,” emphasized CFO James von Moltke.
He explained that in the past, the bank had used the share buybacks only to meet delivery obligations, such as for the remuneration of employees in shares. For this purpose, the bank acquired only 1.6 percent of the outstanding shares last year. The bank does not intend to use share purchases to reduce its capital base.
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”, as fund manager Annecke said.
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”. In the end, however, with 96.5 percent, a large majority voted for this agenda item.
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. Nevertheless, he was elected with almost 98 percent.
Weimer has already left the supervisory board of the FC Bayern München football club, 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. With Achleitner’s officially announced waiver of another term of office, this personnel will now become very important. Weimer never had to worry about his vote result, since critics of his office policy, such as Union Investment or Deka, had announced in advance that he wanted to vote for him.
Even if Deutsche Bank’s Annual General Meeting this year will only take place on the Internet, the traditional protest actions will not fail to materialize. However, because of the ban on contact as a result of the corona pandemic, they are significantly smaller than in previous years: five demonstrators from Attac gathered in front of the bank’s towers in Frankfurt City, demanding that the largest German financial institution clarify the cum-ex tax scandal . The public order office had no longer allowed people.
The bank made further details public. Here is an overview:
- Cum-Ex-Shops I: As part of the “cum-ex-facts” from 2007 to 2011, Deutsche Bank is currently examining whether it can demand compensation from individual members of the Board of Management. This examination has not yet been completed, said Supervisory Board Chairman Achleitner. The possible recoveries are possible on the basis of claw-back clauses in the management board contracts. It was announced last summer that the Cologne prosecutors were investigating 80 suspects, including several board members who worked for the bank at the time or had previously worked. Among those affected was Garth Ritchie, the board member responsible for investment banking at the time.
- Cum-Ex-Shops II: The Annual General Meeting also brought to light that expert opinions from the Freshfields law firm, which was supposed to check whether the bank was to blame for the cum-ex deal in the tax scandal, were partly from Ulf Johannemann. The Freshfields partner is one of the prominent figures in the scandal and was temporarily held in custody due to his role in the cum-ex affair. The bank had the reports prepared by Freshfields checked again by another law firm, it said at the general meeting. Therefore there is no reason to doubt the results. According to Deutsche Bank, it did not directly benefit from cum-ex transactions, but it did work for customers who run such transactions.
- Dispute point salaries: Enduring favorite at every general meeting: high bonuses and low dividends. From 2012 to 2019, the bank paid out a total of 17.7 billion euros in bonuses. Dividends of 4.1 billion euros flowed to the shareholders, reports CFO James von Moltke. The bank has also broken down the areas in which the 583 bankers work who made more than a million euros last year. 17 are current and former board members, 329 the investment bank, 47 the private bank. There were 62 income millionaires at the fund subsidiary DWS and 42 at the processing unit, plus 63 employees in the infrastructure area.
- Women in management positions: Currently there is only one woman on the currently nine-member board with America boss Christiana Riley. That should change in the next few years. The institute’s supervisory board had already decided in 2015 to increase the proportion of women on the executive board to 20 percent by June 2022, which corresponds to about two women on the management board. The Supervisory Board adheres to this goal. The board in turn has set its own target rates for the three management levels below the board. The proportion of women among managing directors, which stood at 18.9 percent at the end of 2019, is expected to increase to 21 percent by the end of 2021. The proportion among directors is expected to increase from 25.9 percent to 28 percent and among vice presidents from 32.6 percent to 35 percent.
- Bafin special test: Deutsche Bank has given details of a special audit by Bafin based on Section 88 of the German Securities Trading Act. The purpose is to check the adequacy, independence and effectiveness of the compliance function. The particular focus should be on the appropriateness of the budget to fulfill the legal tasks and the independence of the compliance function. The Bafin has so far only promised the examination and has not yet carried it out, said Supervisory Board Chairman Achleitner.
- Customer debt moratoriums: By the beginning of May, Deutsche Bank had received and granted the majority of 120,000 customers worldwide who had difficulties with the Corona crisis, for credit deferrals, said CEO Sewing. The majority of the inquiries come from around 100,000 from private customer business in Germany, Spain and Italy.
More: Deutsche Bank in the balance check.