Deutsche Bank

Deutsche Supervisory Board Backs Achleitner

  • Why it matters

    Why it matters

    A change of leadership on the supervisory board could lead to greater instability at Deutsche Bank, which is undergoing a painful restructuring and trying to reduce a U.S. Justice Department fine.

  • Facts

    Facts

    • Paul Achleitner, an Austrian citizen and former Goldman Sachs banker, has served as Deutsche Bank’s supervisory board chairman since 2012.
    • Mr. Achleitner has been criticized for reacting too slowly to mounting legal problems and weak profitability that Deutsche Bank has faced in recent years.
    • Mr. Achleitner received the backing of Deutsche’s largest shareholder, the Al-Thani family of Qatar.
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Deutsche Bank – Paul Achleitner
Despite its troubles, Paul Achleitner will get to continue as Deutsche Bank's supervisory board chairman for another term. Source: Arne Dedert / DPA

Deutsche Bank’s supervisory board chair, Paul Achleitner, will likely live to fight another day despite shareholder dissatisfaction with his handling of the financial institution’s many problems.

According to Handelsblatt’s financial sources, the bank’s non-executive supervisory board has unanimously approved the extension of Mr. Achleitner’s contract, which was set to expire in 2017.

The unanimous decision to back Mr. Achleitner, an Austrian citizen and former Goldman Sachs banker, who has led Germany’s largest bank since 2012, came after a consulting firm conducted an evaluation of the entire supervisory board’s work. The board also consulted with bank’s most important investors.

Mr. Achleitner can thank Qatar’s royal family, the Al-Thanis, for publicly intervening on his behalf.

Mr. Achleitner’s contract extension still has to be approved at the annual shareholder’s meeting in the spring of next year, but that seems likely despite the many misgivings of smaller shareholders.

Mr. Achleitner can thank Qatar’s royal family, the Al-Thanis, for publicly intervening on his behalf. Deutsche Bank’s largest investor issued a statement last March that effectively warned other shareholders against trying to force Mr. Achleitner out. That backing helped Mr. Achleitner survive a testy annual meeting last May.

The statement, issued by the Al-Thani holding company Paramount Services, said Mr. Achleitner’s “leadership remains an important factor underlying Paramount Services Holdings’ investment case and confidence in Deutsche Bank.”

In the end, even Mr. Achleitner’s critics viewed a leadership change as too risky at a time when Deutsche continues to face perhaps the worst crisis in its history. The bank is undergoing a major restructuring and also trying to reduce a potentially crippling $14 billion fine by the U.S. Justice Department. Investor concerns pushed the bank’s stock price to a record low earlier in the fall.

Criticism of Mr. Achleitner has grown as Deutsche Bank has faced a morass of legal and financial challenges. Large investors have accused the supervisory board – which has the power to set strategic goals at German companies and also hire and fire its exceutives – of sticking with former co-chief executives, Anshu Jain and Jürgen Fitschen, and their investment banking model for too long. Current CEO John Cryan became part of the bank’s leadership in July 2015, but only after a shareholder revolt forced Mr. Jain’s resignation. Mr. Cryan has been the bank’s sole CEO since July of this year.

Mr. Achleitner had also faced allegations that he was partly responsible for a $2.5 billion fine imposed by British and U.S. authorities in 2014 over the manipulation of benchmark interest rates. Deutsche Bank stood accused of not cooperating fully in the investigation, and was fined more than any other bank involved in the Libor scandal as a result.

An internal Deutsche investigation found no evidence that Mr. Achleitner had violated his responsibilities as supervisory board chair.

 

Michael Maisch is deputy head of Handelsblatt’s finance section and is based in Frankfurt. To contact the author: maisch@handelsblatt.com

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