Paul Achleitner

How to Stay in Power at Deutsche Bank

  • Why it matters

    Why it matters

    Deciding over strategy and nominating executives, Deutsche Bank’s supervisory board and its chairman wield great powers over the future of Germany’s largest bank, which has struggled for years.

  • Facts


    • Mr. Achleitner, a former Goldman Sachs banker, became supervisory board chairman of Deutsche Bank in 2012; his second term still needs approval from the annual shareholders’ meeting next spring.
    • Critics accuse Mr. Achleitner of holding on to the bank’s old management team for too long and have blamed him for a 45 percent drop in the bank’s share price during his term in office.
    • The position of non-executive chairman is important, because the supervisory board has the power to hire and fire executives, decides on strategy and needs to approve dividend pay-outs.
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Deutsche Bank – Paul Achleitner
Paul Achleitner is set to stay in power, chairing the supervisory board of Germany's largest bank. Source: Arne Dedert / DPA

It’s mid-October at the offices of a major shareholder of Deutsche Bank, Germany’s largest bank. Paul Achleitner, the controversial chairman of the bank’s non-executive supervisory board, has announced plans for a visit.

Indeed, there’s a lot to discuss: what will the bank’s strategy look like and when will an agreement finally be reached with the U.S. Justice Department on the feared multi-billion dollar fine for bad mortgage deals? And should Mr. Achleitner, whom investors hold partly responsible for the bank’s plight, extend his term in office beyond spring 2017?

There are many questions but few concrete answers. One inside source at the meeting described Mr. Achleitner as charming and eloquent, but said that the 60-year-old Austrian refused to be pinned down. In regards to the bank’s strategy, Mr. Achleitner is alleged to have hinted at a possible reintegration of retail bank Postbank and a partial withdrawal from the United States. On the issue of his own future, he was less forthright.

At least two big shareholders are still plagued by concerns, even if they are ultimately convinced that a second term for Mr. Achleitner is more manageable than another management crisis.

Such meetings between the bank and important shareholders are a delicate matter. Insider knowledge that could put other investors at a disadvantage cannot be exchanged. And while insinuation may abound, the really important matters are rarely voiced, particularly where appointments are concerned. However, the inside source said that Mr. Achleitner left no doubt that he intended to stand for re-election as supervisory board chairman.

The position of non-executive chairman is important, because the supervisory board has the power to hire and fire executives, decides on strategy and needs to approve dividend pay-outs.

According to the unwritten rules of his meetings with shareholders, Mr. Achleitner is likely to have interpreted the absence of resistance as implicit support for his ambitions. As other meetings with influential investors progressed similarly, by October it was fairly clear that the old supervisory board chairman would also be the new one.

However, his reappointment should not be seen as a given. At least two of the bank’s ten biggest shareholders are still plagued by concerns, even if they are ultimately convinced that a second term for Mr. Achleitner is more manageable than another management crisis. “But Mr. Achleitner certainly won’t have a free ride,” warned one of the skeptics.

Mr. Achleitner’s comeback is an unexpected twist in the power struggle at Deutsche Bank, but it has not happened by chance. He has been able to run for re-election thanks to an extensive campaign organized with military precision over a period of months.

25-p42-Paul Achleitner track record Deutsche Bank era achtleitners balance sheet

The campaign began after an internal investigation into whether Mr. Achleitner was partly responsible for Deutsche Bank having to pay around £100 million ($125 million) more to the British financial regulator FSA than originally announced. The reason? Insufficient cooperation on investigations into the interest rate rigging scandal. Lawyers at the firm Schilling, Zutt & Anschütz and forensic experts at consultancy Alvarez & Marsal began examining the allegations in January 2016 and eventually concluded that Mr. Achleitner had not breached his official duties.

Being cleared was a key requirement for phase two of the re-election plan. The bank then instructed recruitment consultancy Spencer Stuart to conduct an evaluation of the entire supervisory board. Johannes Teyssen, head of German energy giant E.ON and a member of Deutsche Bank’s supervisory board for eight years, was in charge of the internal investigation.

The widely esteemed London consultants looked at supervisory board members’ qualifications, how often they attended meetings, what subjects they dealt with and the flow of important information. They concluded that the supervisory board, which had been reorganized by Mr. Achleitner personally, was working efficiently and in accordance with the rules. Supervisory board members also assessed each other, while the management board, staff and major shareholders also voiced their opinions.

While it added up to a substantial effort, it was necessary in light of numerous issues that had built up over the course of the year. These included a dramatic drop in the bank’s share price, an embarrassing debate about a government bailout, and a fiasco surrounding Georg Thoma, head of the bank’s internal investigations, who was forced to resign after complaints that his overzealous investigations had paralyzed the bank.

In early October Mr. Achleitner celebrated his 60th birthday in Seefeld, Tirol, with a society event attended by many of Europe’s financial nobility. The third and perhaps most crucial phase of his re-election campaign began at around the same time, with Mr. Achleitner feeling out the bank’s key shareholders on whether they would block the extension of his contract beyond 2017.

The foundations for a possible extension were already laid when the bank’s biggest shareholder, the ruling family of the sheikdom of Qatar, expressed public support for Mr. Achleitner this spring. “The quality of Dr. Achleitner’s leadership remains an important factor in our investment decision and our trust,” said the Al-Thani family, which controls about 10 percent of shares in the bank. And their position hasn’t changed. “The message is very clear: Paul Achleitner and chief executive John Cryan should be given enough time to develop and implement the new strategy,” sources close to the family have said.

“A change at the helm of the supervisory board would shake up the entire power structure, and the bank would be paralyzed for another year.”

Ingo Speich, fund manager, Union Investment

As the Al-Thani family are normally the models of discretion, their decision to comment publicly at the end of March shows how much pressure the head of the supervisory board was under at the time. “Mr. Achleitner appeared to be struggling in the spring,” said one investor. At the bank’s annual general meeting in May, Mr. Achleitner, who had previously been in charge of Goldman Sachs in Germany, complained that “anonymous criticism of the bank and of individual people may increase media attention, but it won’t get the bank anywhere.” The criticism is alleged to have come from large shareholders who were hoping for a change of leadership on the supervisory board.

Mr. Achleitner is regarded as one of the most skillful manipulators of German business, a cunning tactician who knows how to forge coalitions, negotiate compromises and create harmony where there was previously none. However, critics complain that he held on for far too long to the old management team led by former co-chief executive Anshu Jain and to Jain’s vision of a global universal bank. This hesitation is seen has having accelerated the bank’s downfall.

Ultimately, shareholders’ anger crystallized in a single figure­, the bank’s share price, which has fallen by around 45 percent since Mr. Achleitner took up his post in May 2012. “In our view, it’s not a question of whether Deutsche Bank needs a new supervisory board chairman, but of when,” said a major shareholder in February.

So what has changed since then? “Actually not much,” one anonymous critic said. However, it quickly became clear that it would be difficult to find a more qualified successor. Axel Weber, former president of Germany’s central bank and now chairman of the board of directors of Swiss bank UBS, would have been an ideal candidate for many investors. But Mr. Weber declared at an early stage that he was not interested.

Some major shareholders believe in any case that the German financial regulator would not have approved an external candidate following the turbulence of recent months, as any replacement for Mr. Achleitner would have been required to spend months learning about the bank’s problems. In the end, Mr. Achleitner’s critics conceded that the bank had to be spared another leadership contest, which could have led it even deeper into crisis.

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Ingo Speich, a fund manager at Germany’s Union Investment, agreed: “A change at the helm of the supervisory board would shake up the entire power structure, and the bank would be paralyzed for another year.”

Mr. Speich believes the bank is still stuck in crisis mode and that Mr. Achleitner’s hesitation in restructuring the management board is one of the reasons why the bank is still battling to find a viable business model. Unlike some other large investors, however, the fund manager feels that Mr. Achleitner did “a solid job” during his first term.

“What is crucial for us is that he made the right changes to the supervisory board and provided more expertise there,” he said, adding that the supervisory board is working more efficiently today than it has in the past ten years.

Mr. Achleitner’s colleagues on the supervisory board do not regard him as controversial. He recruited many of the shareholder representatives himself and has won over the employee representatives with his open communication policy. Supervisory board members have unanimously praised the bank’s culture of open discussion. Given that the bank’s situation is still critical, is it justifiable to nominate him for a second term? The bank’s supervisory board debated this issue into the night at its meeting in October, ultimately voting unanimously for Mr. Achleitner.

Mr. Achleitner has made no secret of the fact that he would like to continue. “Despite all the hostility, he would have regarded a withdrawal as desertion,” said one source close to the banker. Mr. Achleitner wants to finish his job to prove that he has been an effective leader in the history of Germany’s biggest bank.

The management board’s new strategy could prove crucial. Following meetings with top managers, investors have the impression that retail bank Postbank, which was supposed to be sold, will now be reintegrated into the Deutsche Bank group. There are also indications that Deutsche Bank could partially withdraw from the important U.S. market.

These are sensitive issues for Mr. Achleitner, who had approved and defended the old strategy. He may therefore attempt to distance himself somewhat from John Cryan, whom he had originally recruited to Deutsche Bank. Sources say that no matter what, the supervisory board chairman will certainly not intervene as strongly in operational matters as it did when Mr. Jain was co-chief executive.


Michael Maisch is the deputy chief of Handelsblatt’s finance desk and based in Frankfurt, Germany’s financial capital. To contact the author:

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