Dr Hans-Christoph Hirt, Director at Hermes EOS:
Management board overhaul on 18 October 2015
Deutsche’s supervisory board and its new-CEO, John Cryan, reacted decisively to the concerns raised by investors and regulators about the management board with a major overhaul of its composition on 18 October 2015. We commend Deutsche’s leadership for listening to the concerns and taking some tough personnel decisions thus making possible a genuine, new beginning at top management level in preparation of the implementation of Strategy 2020.
We specifically welcome the appointment of senior executives with relevant experience and skills to the management board to focus on compliance, legal and regulatory matters and the additional accountability provided through the representation of the bank’s four main business divisions.
Details of Strategy 2020 announced on 29 October 2015
We welcome Strategy 2020’s focus on reducing Deutsche’s scope, complexity and costs and shrinking risk-weighted assets and support the objectives of strengthening capital and ultimately creating adequate returns for investors. At the same time, we welcome the recognition that significant investment in the bank’s infrastructure and information technology is necessary to make its businesses more efficient and less susceptible to conduct incidents.
Following the announcements in October, the new shape of Deutsche as a slimmed-down universal bank has started to emerge. We look forward to the management board’s execution of Strategy 2020 and delivering on the cost reduction, capital and return targets.
Concerns about conduct, risk management and culture
We are concerned that Deutsche continues to experience reported conduct incidents, such as the alleged money laundering and possible breaches of sanctions in Russia or the recently reported, accidental transfer of funds. We urge the management board to make conduct, risk management and the creation of a culture that facilitates sustainable value creation and minimises conduct incidents an integral part of Deutsche’s new business model.
Hermes EOS engagement around annual general meeting on 21 May 2015
Following a long-standing engagement with Deutsche Bank, Hermes EOS, on behalf of a group of more than 40 institutional investors, urged the supervisory board ahead of and at the annual general meeting on 21 May 2015 to review the composition of the management board. We had previously raised concerns about the management board’s delivery on key targets set under Strategy 2015+, the way it had dealt with litigation and investigations and its progress on culture change.
Co-CEOs resignation on 7 June 2015
We welcomed the resignations of the co-CEOs Anshu Jain and Jürgen Fitschen on 7 June 2015 only weeks after the shareholder meeting, at which almost 40 percent of the investors present voted against the management board, thus expressing their lack of confidence in its members and implicitly urging the supervisory board to review its composition.