Deutsche Bank Investors, Armed With a List of Complaints, Face Managers

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FRANKFURT — Deutsche Bank shareholders had plenty of reasons to be unhappy as they converged in a Frankfurt concert hall Thursday for the troubled lender’s annual meeting.

A record low share price. An aborted megamerger with crosstown rival Commerzbank. Money laundering scandals. New revelations about the bank’s relationship with Donald Trump.

The question Thursday, as the shares sank another 2 percent, was whether investors were outraged enough to deliver an uncommon rebuke to top management — one that could put pressure on Paul Achleitner, the supervisory board chairman, to resign.

As the annual meeting got underway, signs were that Mr. Achleitner would survive with the forbearance of large shareholders who are not happy with his performance but fear the impact of further management turmoil. There is also a dearth of credible successors in Germany.

“It’s shocking and sad what has become of Deutsche Bank,” Alexandra Annecke, a portfolio manager at Union Investment, a German fund manager, told shareholders.

But she said the fund, which owns 0.4 percent of Deutsche Bank shares, would vote to ratify management. “We want to give Mr. Sewing and Mr. Achleitner a chance,” she said, referring to Christian Sewing, the chief executive.

Normally the vote to ratify top managers is a formality at German shareholder meetings. But investors in European companies have recently shown their willingness to force change at troubled companies.

Last month, corporate Germany was shocked when shareholders in Bayer, the drug and chemical maker, voted not to ratify the performance of the management board. The investors were enraged by the company’s botched acquisition of American pesticide maker Monsanto.

It was the first time in memory that a German management had been confronted with such a vote of no confidence. It rattled boardrooms around the country and raised the question about whether Deutsche Bank’s top managers would face a similar insurrection. Mr. Achleitner is a member of the Bayer supervisory board and observed the revolt firsthand.

“It was a big moment,” Jim Rossman, a managing director at investment bank Lazard, said of the Bayer vote.

Mr. Rossman is head of a unit at Lazard that helps companies fend off attacks on management by hedge funds and other activist investors. He told reporters earlier this month that the activist funds, often with the quiet support of big mutual funds, have lately been targeting European companies, demanding changes they think will deliver a bigger payoff for shareholders.

The possibility of a no-confidence vote rose after shareholder advisory firms urged investors to send a message.

“We believe it is time for shareholders to hold the boards accountable for the many years of substantial monetary and reputational costs to the bank borne by shareholders,” one of the firms, Institutional Shareholder Services, said in a report earlier this month that advised clients to vote against ratifying Deutsche Bank’s management and supervisory boards.

ISS and Glass, Lewis & Co., another influential advisory firm advocating a vote of no confidence, cited the damage inflicted on the bank’s finances and reputation by persistent money-laundering scandals.

On Wednesday, Deutsche Bank acknowledged that it used faulty software to screen customer transactions for suspicious activity. The bank said it had alerted regulators and was working to fix the problem as soon as possible.

Mr. Sewing, the Deutsche Bank chief executive, promised Thursday to improve the bank’s internal controls. But he also suggested that the bank was unfairly targeted when German prosecutors raided company offices in Frankfurt in November as part of a money laundering investigation. The negative media coverage “hit us hard,” Mr. Sewing told shareholders.

“It is, of course, a criminal investigator’s duty to conduct a thorough examination of any suspicious circumstance,” Mr. Sewing told shareholders. “However, it’s possible to have diverging views on the manner in which it happened in November.”

“We still have no concrete evidence that would support the allegations against us or any of our employees,” Mr. Sewing said.

In response to questions from shareholders, Karl von Rohr, the bank’s chief administrative officer, defended the bank’s decision not to tell regulators about multiple transactions involving legal entities controlled by Donald J. Trump and his son-in-law, Jared Kushner. The transactions, reported by The New York Times this week, were flagged by the bank’s anti-money laundering specialists.

“There are processes that in this case functioned,” Mr. von Rohr said. “There was nothing unusual” about the way the transactions were handled, he said.

Shareholders directed special wrath at Mr. Achleitner, a longtime mover and shaker in the German economy.

“I have had enough of the way you destroy our wealth,” said Karl-Walter Freitag, a shareholder activist who is a fixture at German annual meetings. “You’re by far the worst chairman the bank has ever had.”

“Have I made mistakes in the last seven years?” Mr. Achleitner responded. “Of course I’ve made mistakes. Am I the source of all the problems? Of course not.”

Although Mr. Achleitner was expected to prevail Thursday, he could face pressure to resign before his term ends in 2022 if shareholders give him a less than overwhelming majority.

The vote was expected sometime in the course of Thursday evening after dozens of shareholders had exercised their right to address the gathering.

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