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Deutsche Bank faces shareholder showdown Deutsche Bank faces shareholder showdown
(about 9 hours later)
Deutsche Bank faces a potential stormy annual shareholder meeting on Thursday with calls for a management overhaul. Deutsche Bank faces a potential shareholder revolt at its annual general meeting on Thursday.
UK-based Hermes Equity Ownership Services intends to declare a no-confidence vote in the board of the German banking giant.UK-based Hermes Equity Ownership Services intends to declare a no-confidence vote in the board of the German banking giant.
Shareholder advisory group ISS has already recommended that Deutsche investors withhold their backing.Shareholder advisory group ISS has already recommended that Deutsche investors withhold their backing.
Investors are uneasy about Deutsche's profits growth, mounting regulatory fines, and restructuring plans.Investors are uneasy about Deutsche's profits growth, mounting regulatory fines, and restructuring plans.
In a blunt statement, Hermes' director Dr Hans-Christoph Hirt said: "Valuable time and credibility has been lost by the management board's late recognition that changes to the bank's structure and business model are required to sustainably create value in a changed regulatory environment. "We have questions about the unsatisfactory delivery on key targets of their strategy, which has led to very poor performance of their share price," said Hermes' director Dr Hans-Christoph Hirt on the BBC's Today programme.
"We have previously queried with the bank itself the suitability of Juergen Fitschen and Anshu Jain, the bank's two chief executives, to lead Deutsche's culture change, given their long tenure in key leadership positions including at the investment bank," Mr Hirt said. "We are also concerned about what seems to be limited progress on culture change and dealing with litigation investigations.
"Last but not least, we are very concerned about the $2.5bn fine to settle the investigations into the Libor rigging involvement of Deutsche Bank. It's not just the money. The findings of the regulators suggest very serious misconduct. It's something we think the management is responsible for," he added.
Hermes holds a stake of just less than 5% in Deutsche Bank. It invests on behalf of clients including 41 pension funds around the world.
'Strong concerns'
In a statement on Wednesday Mr Hirt said: "We have previously queried with the bank itself the suitability of Juergen Fitschen and Anshu Jain, the bank's two chief executives, to lead Deutsche's culture change, given their long tenure in key leadership positions including at the investment bank."
He added that Hermes would "vote against the so-called discharge of the members of Deutsche Bank's management board. With this vote we formally express our strong concerns about a range of issues and our lack of confidence in the management board."He added that Hermes would "vote against the so-called discharge of the members of Deutsche Bank's management board. With this vote we formally express our strong concerns about a range of issues and our lack of confidence in the management board."
Under German corporate governance rules, a vote to "discharge" a board is a vote of confidence. Voting against discharge is seen as a strong criticism.Under German corporate governance rules, a vote to "discharge" a board is a vote of confidence. Voting against discharge is seen as a strong criticism.
On 8 May, ISS, which acts as a consultant to big investors and hedge funds, advised investors not to support the board. ISS was particularly concerned about the size fines being imposed on Deutsche.On 8 May, ISS, which acts as a consultant to big investors and hedge funds, advised investors not to support the board. ISS was particularly concerned about the size fines being imposed on Deutsche.
Last month, Deutsche unveiled the next phase of it restructuring, Strategy 2020, but shareholders, including Hermes, have said there is not enough detail. Last month, Deutsche unveiled the next phase of its plan to boost profitability, Strategy 2020, but shareholders, including Hermes, have said there is not enough detail.
Late on Wednesday the bank reshuffled its board. Co-chief executive Anshu Jain will now head up the bank's restructuring plan.
Deutsche's co-chief executives have recently said that they have no plans to step down.Deutsche's co-chief executives have recently said that they have no plans to step down.
A Deutsche spokesman declined to comment.A Deutsche spokesman declined to comment.