Deutsche Bank governance disputes continue despite departure of chair

Governance disputes continue to plague Deutsche Bank ahead of its AGM despite the impending departure of chair Paul Achleitner, with CEO Christian Sewing facing a vote of confidence after a serial filer of non-confidence motions made a return to the proxy stage.

In a 47-page filing, minor shareholder Riebeck-Brauerei details a number of concerns over Sewing’s conduct, claiming that a number of events “[call] into question his professional suitability due to a particularly immature risk awareness and, on the other hand, reveals that [he] does not have the integrity and courage to place the bank’s interests above his own interests in promoting his professional advancement”.

Sewing’s involvement in a number of controversies involving both the bank and DWS, the filing alleges, demonstrate a lack of professional suitability for the role. Among the controversies mentioned are allegations of greenwashing levelled at DWS, which it denies but have led to investigations by both the SEC and German regulator BaFin.

Riebeck-Brauerei is a serial filer of confidence motions at Deutsche Bank, having put shareholder confidence in chairman Paul Achleitner on the ballot in various forms in 2018, 2019 and 2020. The motions gained 9.05 percent, 9.75 percent and 2.85 percent. Riebeck-Brauerei is targeting Sewing this year, as Achleitner is set to retire.

In a response to the filing of the proposal, the bank’s management board said that the allegations “present a picture of the facts that is inaccurate in material respects” and that “the conclusions drawn are substantially incorrect”, while the supervisory board proposed voting against the proposal and said that it places its “highest confidence” in Sewing.

A spokesperson for Deutsche Bank said: “The request submitted by [Karl-Walter Freitag, the investor behind Riebeck-Brauerei] regarding the addition of an agenda item is riddled with half-truths … Resolutions he has proposed at previous Deutsche Bank annual general meetings have regularly been unsuccessful and he also lost in court. His claims have repeatedly turned out to be false”. Proxy advisor ISS has recommended a vote against the motion.

The bank is also facing a counterproposal from the Dachverband der Kritischen Aktionärinnen und Aktionäre (Association of Ethical Shareholders), which is recommending a vote against ratification of the acts of management of the management board, citing the bank’s continued lending to coal companies and financing for companies involved in illegal mining, as well as nuclear weapons manufacturers.

Sewing took over as chief executive of Deutsche Bank in 2018 following a succession of co-CEOs after 2012, when long-standing Deutsche Bank chief Josef Ackermann left.

Achleitner, who previously worked at Goldman Sachs and Allianz, joined Deutsche Bank’s board as chair in 2012.

Deutsche Bank, which is one of Europe’s largest lenders with more than a trillion in total assets, has faced multiple challenges over the past decade, including squeezed margins and various litigation issues. In 2019, Sewing embarked on an ambitious restructuring programme that saw thousands of job cuts and an exit from equity trading. Merger talks between Deutsche and domestic peer Commerzbank, however, failed to reach agreement.

The governance troubles at Deutsche attracted interest from activist investors aiming to shake up the bank’s status quo. American private equity group Cerberus invested in both Deutsche and Commerz in 2017 and, after their failed merger discussions, pushed for Achleitner’s exit.

Achleitner survived several shareholder campaigns against him – Hermes Investment Management publicly asked for his departure in 2018 after Sewing was made CEO – but announced that he would not put himself forward for a third five-year term in 2022. Cerberus meanwhile is scaling back its holdings in both banks and has reportedly made a loss on its bet to transform Germany’s banking sector.

After a tumultuous recruitment process, Dutch insurance veteran and Citigroup board member Alex Wynaendts is set to succeed Paul Achleitner as the new chair. Sewing has extended his contract to 2026, despite minority investors continuing to denounce alleged governance failings by the bank.