Shareholder Revolt

High Noon at Deutsche Bank

Hintergrund mit Uhr 5 vor 12
Patience is wearing thin with Deutsche Bank's management team of Anshu Jain and Jürgen Fitschen.
  • Why it matters

    Why it matters

    Hermes has caused trouble for a number of German companies in the past. Its decision to withdraw confidence in Deutsche Bank’s management is likely to cause turmoil at the bank’s supervisory board meeting today.

  • Facts


    • Deutsche Bank’s non-executive supervisory board is meeting today to discuss whether a shake-up in the bank’s management board is in order, Handelsblatt has learned.
    • A turbulent annual meeting expected is expected to follow on Thursday in Frankfurt, where the bank’s largest shareholders will gather to discuss the bank’s future.
    • A number of investors are unhappy about the bank’s legal troubles and lack of profitability, and on Thursday could issue a formal disapproval of the actions of the management board.
  • Audio


  • Pdf


Hans-Christoph Hirt isn’t someone to be underestimated. The manager of British pension fund and investor advisor Hermes Equity Ownership Services has already rocked the boat at several major German corporations, from Siemens to Porsche to Infineon.

At Infineon, he instigated a shareholder revolt that eventually led to the resignation of its then supervisory board chairman, Klaus Wucherer.

Now Mr. Hirt is turning his attentions to Deutsche Bank and its own embattled management board, led by Anshu Jain and Jürgen Fitschen.

“We will ask the supervisory board to review the composition of the management board in the coming months. The board no longer enjoys our confidence,” the London-based director of Hermes, which is named after the messenger of the gods in Greek mythology, told Handelsblatt.

The calls from London lend a new dimension to a resistance movement that has grown among shareholders unhappy with the direction and legal troubles that have dogged Germany’s largest financial firm and one of the world’s largest investment houses.

It may have worked much faster than even Hermes expected.

Handelsblatt has learned that the bank’s non-executive supervisory board, which has the power to hire and fire the bank’s chief executives and other top-level managers, will address the possibility of more extensive changes to the management board at a closed meeting on Wednesday.

Deutsche Bank was unwilling to comment on the reports.

“We will ask the supervisory board to review the composition of the management board in the coming months. The board no longer enjoys our confidence.”

Hans-Christoph Hirt, Director, Hermes

The intervention by Hermes marks the most direct attack yet on the bank’s leadership, and could make an annual shareholders meeting planned for Thursday even more turbulent than was already expected.

Until now, the main goal of the shareholders in revolt was to register their formal disapproval of the actions of the management board, which is being held responsible for a long list of scandals and lawsuits that have undermined the bank’s profitability.

Other major shareholders, including the advisory firm ISS, have also expressed discontent in the past few weeks, a turbulent period in which Germany’s largest bank received a record $2.5 billion (€2.2 billion) fine for its role in the rigging of the Libor interest rate benchmark.

What particularly annoyed shareholders was not just the fine – other global banks received similar penalties – but the harsh criticism by regulators that Deutsche Bank didn’t cooperate enough with authorities. This displeased investor advisers including ISS, Glass, Lewis and Ivox.


118 Deutsche Bank-WTB 2014


The disappointment with management also stems from what many investors viewed as a lackluster restructuring announcement by the bank late last month. Mr. Jain and Mr. Fitschen have promised drastic cuts in the bank’s overhead costs by closing branches, selling off its retail arm Postbank and cuts in investment banking, but they stopped short of a more radical option to split the bank in two that had been favored by many investors.

The strategic overhaul has already prompted the resignation of one management board member – retail chief Rainer Neske – who is stepping down in protest at the bank’s decision to significantly reduce its global footprint in retail banking. The supervisory board had already been expected to discuss his replacement in Wednesday’s meeting.

Both shareholders and bank insiders expect significantly more than a fifth of investors attending Thursday’s meeting will refuse to issue their approval of the management board’s recent actions. But thanks to a normally low presence of less than 40 percent of the bank’s overall capital at these meetings, it is seen as unlikely that the revolting shareholders will achieve an overwhelming majority.

The question is whether other investors will heed Hermes’ call to take the revolt a step further. The British investor went beyond such a formal disapproval – instead publicly addressing the leadership question for the first time.

Mr. Hirt intends to publish his criticism in a letter on Wednesday, in which he argues that the bank’s top leadership has been only moderately successful in implementing its strategy since Mr. Jain and Mr, Fitschen were appointed CEOs in 2012.

The letter also argues that cultural change promised by the leadership team has not been pursued aggressively enough, and litigation has been handled inconsistently. The lack of cooperation with authorities is also singled out.

According to information from financial circles, the criticism from Hermes is especially aimed at the bank’s co-CEOs, Anshu Jain and Jürgen Fitschen, even though the pension fund does not mention them in so many words in its letter. The omission was no doubt intentional: Under German law, only the supervisory board members and not the shareholders are responsible for the actual composition of the management board.

This is not the first time Mr. Hirt of Hermes has been a thorn in the side of Deutsche Bank and its new leadership.

Three years ago, during the bank’s chaotic search for a successor to then CEO Josef Ackerman, he opposed the supervisory board and advocated refusing to issue formal approval of the supervisory board’s actions. The campaign achieved an unheard-of 22 percent of dissenting votes.

It was intended as a message to the new supervisory board chairman, Paul Achleitner, to represent the interests of shareholders. From Hermes’s perspective, this message has not yet been taken on board.

Whether or not the supervisory board heeds the advice of Hermes on Wednesday, it’s clear that the bank’s annual shareholders’ meeting planned for the following day is bound to be turbulent.


Daniel Schäfer, a former Financial Times reporter in London, leads Handelsblatt’s finance section in Frankfurt. Christopher Cermak, an editor with the Handelsblatt Global Edition in Berlin, also contributed to this story. To contact the author: and


We hope you enjoyed this article

Make sure to sign up for our free newsletters too!