Deutsche Bank, Germany’s largest bank, seems to be in deep waters after a failed merger with Commerzbank. The merger, as Deutsche would hope, should have been their last saving grace as the multinational investment and bank company’s share prices continue to plummet. The talks were spurred from the idea that the two biggest banks in Germany could create a lender large enough to cater to Wall Street’s giants.
But the prospect of pursuing the merger seems to have been grim, to begin with.
The bank hasn’t had the best track record in recent years. In a bid to raise 8 billion euros in additional capital, the bank sold newly issued shares in 2017. Share prices have only fallen since then.
Labor unions were against it. With the two largest banks in Germany coming together, bank workers were quick to take the streets to address their concern for job cuts estimated to be by the thousands.
On the other hand, the European Central Bank advised caution in favor of the public’s interest, particularly of the shareholders. Mario Draghi, president of the European Central Bank, stated that the merger should create “an entity which is strong and capable of coping with the various challenges,” referring to the transaction being successful in that it benefits all parties involved looking towards the future. After all, the tie-up would leave Germany with only one publicly traded bank.
As merger talks finally came to a halt, the bank’s chair and lender’s senior executives are under fire for allegedly failing to safeguard the company from internal malpractices.
While top proxy advisers Glass Lewis and ISS were quick to advise investors to vote against the endorsement of the bank’s current supervisory and management boards, ECGS, a European proxy vote adviser, further drives the point by speaking against bank’s supervisory board chairman Paul Achleitner.
On a circular released by ECGS, the proxy stated its concern over Achleitner’s “handling of personnel issues even after [the German banking regulator] BaFin and other supervisory authorities considered it necessary to order the appointment of a special auditor to oversee the company’s progress in battling illegal transactions.”
While the present seems to be trying times for Deutsche Bank, the future appears to be just as bleak for the heads of the company.
As the annual meeting of shareholders takes place on May 23, ISS said that they should use the opportunity to hold the boards “accountable for many years of substantial monetary and representational costs.”