Board Showdown

High Noon at Deutsche Bank

Deutsche Bank Hauptversammlung
Deutsche Bank's annual shareholders' meeting on May 19 could see a nasty board fight spill out into the open over the future of its chairman, Paul Achleitner. Here, a scene from the bank's 2015 shareholders' meeting.
  • Why it matters

    Why it matters

    • The feud at Deutsche Bank threatens to weigh down Germany’s largest financial institution at a time when it is trying to rebound from a string of scandals, including an interest-rate manipulation scheme that cost the bank dearly.
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  • Facts

    Facts

    • In 2015, U.S. and British regulators fined Deutsche Bank $2.5 billion for the involvement of some employees in a global fraud to fix interest rates benchmarks and generate illegal profits. The regulators fined the bank because they said it tried to impede their investigations.
    • Supervisory board member Georg Thoma is investigating whether top managers at Deutsche Bank, including chairman Paul Achleitner, played a role in how the bank dealt with regulators at the time.
    • Some other members of the bank’s supervisory board have attacked Mr. Thoma for what they view as an over-the-top approach to probing misconduct at the bank.
  • Audio

    Audio

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The first quarter of the financial year is usually a good time for big banks like Deutsche Bank, but analysts fear this year investors could be in for more bad news.

On Thursday, shareholders are hoping that the release of results for the three months through March will signal better times. Germany’s largest bank is reeling from a legacy of problems – the most pressing being the political fallout of a costly manipulation of interest rate benchmarks by some of its employees from 2006 to 2010.

An internal investigation is probing the role played by supervisory board chairman Paul Achleitner in the bank’s cooperation – or lack of it – with U.K. and U.S. regulators that investigated the rate manipulation scandal. The regulators eventually fined Deutsche Bank a combined $2.5 billion for its role in the global collusion, and criticized the bank for trying to impede their probes.

Mr. Achleitner, a former Goldman Sachs Germany director, vehemently denied any attempt to hinder the investigation earlier this month in an interview with Handelsblatt sister publication WirtschaftsWoche.

But the matter hasn’t ended there.

 

The Libor Scandal-Deutsche Bank

 

That’s largely because of Georg Thoma, a Deutsche Bank supervisory board member who leads an “integrity” committee trying to get to the bottom of the scandal. Mr. Thoma, a Frankfurt mergers-and-acquisitions lawyer with a reputation for tenacity and propriety, has been aggressively investigating the matter – too aggressively, apparently for some members of Deutsche Bank’s supervisory board.

Mr. Thoma’s efforts to clarify what role Mr. Achleitner played in a strategy to mislead or hinder the regulators has turned into political dynamite, and divided the bank’s top policy-setting panel at a time when investors are already unhappy with its lackluster restructuring and inconsistent performance.

Some members of the supervisory board, in internal emails and memos seen by Handelsblatt, are accusing Mr. Thoma of overreaching and taking his inquiry into the bank’s misdeeds – and into Mr. Achleitner’s role – too far.

The issue threatens to boil over today, when the supervisory board’s executive committee will meet to discuss an potentially explosive dispute that could turn public at the bank’s May 19 annual shareholders’ meeting.

Mr. Thoma was appointed to Deutsche Bank’s supervisory board in 2013 to head the internal investigation into the rate-manipulation scandal, which involved traders at Deutsche Bank, Barclays, Royal Bank of Scotland, Societe Generale and Citigroup, among others.

The traders were caught colluding – through emails and instant messaging – to artificially set the London Interbank Offered Rate and Euro Interbank Offered Rates, which make up two of the most widely used benchmarks that commercial banks use, to set their own lending and interest rates for a range of transactions.

Most of the traders directly involved in the fraud have been prosecuted or left their posts.

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