Day Topic: Deutsche Bank Annual General Meeting, 20/05/2015
Today in Frankfurt the General Meeting of Deutsche Bank took place, more than nine thousands shareholders signed in for the event. At the very heart of the discussion there was the 2020 plus strategy agenda, the program has been discussed throughout the past years with also some extreme options considered, such as the exit of the firm from the investment banking industry. Alongside the topics related to the future strategy the result of the 2015 strategy have been presented and an important part of the presentation has been dedicated to the latest litigation for misconducts that have shaken the banking sector.
Looking at the past four out of six goals from the previous plan have been reached by DB management, the firm have experienced an increase of capital strength (result supported also by the first ECB stress tests) and a more efficient network, with a more focused approach on the company’s core areas (investment banking, corporate and private banking, retail banking and asset and wealth management). The management in 2012 has also launched a cultural change programme that is showing its first results, however fraudulent behaviours from employees are still taking place and they are generating a big chunk of the legal fees. Costs and legal fees are the areas where the management missed the expected improvement and they are the bridge between the past and the future strategies. For the future DB is expecting to tackle even harder its costs structure with a reduction of the IB division balance sheet and the closure of some branches around the world in order to allow a better focus on attractive areas. On the retail banking side the company is planning to split up Deutsche retail division and Deutsche PostBank given the low level of synergies between the two customer clusters and new capital legislation.
The Management has been put under pressure by unsatisfied shareholders judging results not in line with their expectations. The Co-CEO Anshu Jain in now the direct supervisor of the restructuring plan, which will follow the pillars of the new strategy plan as defined in the meeting. Management have been incapable of securing a good stock return the last year. Deutsche Bank’s shares are one of the worst performers among peer in the last year. The new strategy will require a massive €3.5bn cost-cutting program.
Financial performance of 2014 as also been presented to the shareholders, DB has hugely increased its pre-taxes and after-taxes results for the period with an improvement in revenues in all the core business areas but the achievements are also due to a decrease in legal fees and loan-loss-provisions for the previous period. However in the first quarter of this year litigation expenses are already bouncing back to historical highs mainly for the LIBOR and exchange rates scandal.
Andrea Mangone, Master Student