German shareholder association DSW vows to re-submit governance audit proposal at Deutsche Bank

Bank says audit not necessary as scandal-plagued management has left

German shareholder association DSW is holding firm on its wish to have a special audit of Deutsche Bank’s governance be conducted to ensure that scandals like Libor rigging don’t happen again.

Speaking at a news conference in Frankfurt, DSW Vice President Klaus Nieding said the association would seek another shareholder vote on the audit at Deutsche’s annual general meeting (AGM) in May if it does not succeed in getting one through legal means.

At Deutsche’s 2015 AGM, a shareholder proposal from the DSW urging the audit failed with 14.35% of the votes in favour. Among the investors supporting the measure were Dutch pension investor PGGM and the British Columbia Investment Management Corp.

Following the AGM, the DSW decided to make use of its legal right to request the governance audit from a Frankfurt court. That right stems from the fact that the association represented more than €100,000 worth of share capital in Deutsche prior to the AGM.

But as the court has yet to decide and may not before Deutsche’s upcoming AGM, Nieding, whose firm Nieding + Barth, is involved in investor action against VW, said the association would re-submit its proposal from 2015. “We already have enough investors to put it on the agenda,” said DSW Managing Director Marc Tüngler, who also spoke at the conference. But Tüngler and Nieding stressed that the DSW was only remaining firm on the audit, as Deutsche refuses to have one done voluntarily.For its part, Deutsche says a governance audit – which shareholders in the bank would have to finance – is unnecessary, as most of the management that was in place during the scandals has left.

Indeed, Anshu Jain was forced to resign as Chief Executive shortly after last year’s AGM after nearly 40% of shareholders voted against discharging him and the rest of the management board. Jain has been replaced by John Cryan, a former Chief Financial Officer at UBS.

Following a loss of €6.8bn for 2015, Cryan is trying to turn the bank around by cutting 9,000 jobs, selling assets like retail bank Postbank and shutting down operations in 10 countries outside of Germany. At a news conference late last January, Cryan expressed hope that Deutsche could settle most of the legal claims and regulatory fines related to the past scandals. The bank has set aside €5.5bn for the settlements and could be forced to raise that number.

Asked to comment on Cryan’s restructuring efforts, the DSW’s Nieding said that while they were laudable, the CEO had not yet articulated a vision for the bank’s future. He said: “It continues to have problems in its investment banking division and after it sells Postbank, it will no longer be among the top ten (universal) banks. So, investors want to know what the future business model will be for Deutsche.”