Deutsche Bank Co-CEOs To Resign Amid Shareholder Frustration

Back in May, Deutsche Bank’s (DB) co-CEOs Anshu Jain and Jürgen Fitschen got a rude awakening. 

At the bank’s annual meeting, less than two-thirds of shareholders said they approved of top management’s performance. That was down markedly from nearly 90% the year before. 

At issue: ambiguity surrounding planned cost cuts, distant profitability targets, and investor concern about the bank’s corporate culture. 

Deutsche, perhaps more than any other firm on Wall Street, embodies the corrupt bank stereotype.

Allegations against the bank and its employees range from rate-rigging to the violation of US sanctions on Iran. Legacy litigation has cost the bank around $9 billion over the past three years alone and that figure could rise materially as reports suggest the DoJ may seek to extract a settlement of as much as $2-3 billion related to soured MBS in the coming months.

The problems go beyond the high profile cases. Last month for instance, Deutsche paid $55 million to settle an SEC investigation related to allegations the bank deliberately obscured billions in paper losses on a derivatives book tied to the 2007 collapse of the Canadian ABCP market. 

From Deutsche’s annual report:

We are currently the subject of regulatory and criminal industry-wide investigations relating to interbank offered rates, as well as civil actions. Due to a number of uncertainties, including those related to the high profile of the matters and other banks’ settlement negotiations, the eventual outcome of these matters is unpredictable, and may materially and adversely affect our results of operations, financial condition and reputation. 

A number of regulatory and law enforcement agencies globally are currently investigating us in connection with misconduct relating to manipulation of foreign exchange rates. The extent of our financial exposure to these matters could be material, and our reputation may suffer material harm as a result. 

A number of regulatory authorities are currently investigating or seeking information from us in connection with transactions with Monte dei Paschi di Siena. The extent of our financial exposure to these matters could be material, and our reputation may be harmed. 

Regulatory and law enforcement agencies in the United States are investigating whether our historical processing of certain U.S. dollar payment orders for parties from countries subject to U.S. embargo laws complied with U.S. federal and state laws. 

We have been subject to contractual claims, litigation and governmental investigations in respect of our U.S. residential mortgage loan business that may materially and adversely affect our results of operations, financial condition or reputation.