DEUTSCHE BANK AG
Deutsche Borse: DBK Annual Meeting: 5/21/2015
Deutsche Bank AG’s upcoming annual meeting is set to be a lively affair, with many shareholders likely to have further lost confidence in the Company’s strategic direction, patience with its management, and faith in its internal governance over the course of the year.
At the end of April, Deutsche’s management outlined a five-year restructuring program with the principal aims to reduce annual costs and leveraging while increasing capitalization. It is unclear whether the plan, which lacked the revolutionary nature for which some commentators were hoping, was received with disappointment by shareholders or whether they were still struggling to digest the significant slump in the bank’s year-on-year net profits for the first quarter of 2015, but the Company’s shares were trading down by over 5% at the end of the day on which it was announced to shareholders.
More worrying for shareholders however is likely to be the vast array of legal issues in which the bank and, in some cases, members of the management board have been implicated. In April, Deutsche reached a settlement with regulators to conclude investigations into benchmark rate manipulation, which saw the bank paying an aggregate of around $2.5 billion and receiving a thorough dressing down from the regulatory authorities for its conduct throughout the investigation. Deutsche’s co-CEO Jürgen Fitschen is also currently standing trial on charges of complicity with perjury in relation to testimony given during a previous court case and investigations into the actions of Fitschen and CFO Stefan Krause are being conducted by the Frankfurt public prosecutor in relation to corporate tax evasion.
These cases, as well as several other investigations into the bank’s business practices in recent years, are not only likely to be an unwelcome distraction as the Company attempts to adapt to adverse market conditions, but will undoubtedly lead to some shareholders questioning whether to ratify the acts of the management and supervisory boards for the past fiscal year.
At the meeting, shareholders will also be faced with the question of whether to commission a special audit into the appropriateness of the bank’s litigation provisions and the robustness of its risk management and compliance system, following a proposal from a shareholder group. Given the size of recent settlements and the scope of recent investigations, it is reasonable to expect that some shareholders would welcome the reassurance that a special audit could provide.
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