Hermes, the fund manager owned by British Telecom Pension Scheme, has struck out at Deutsche Bank’s management board members, saying it lacks confidence in them.
Hermes, through its corporate governance unit called Equity Ownership Services (EOS), will vote against the so-called discharge of the members, which means it objects to board actions over the past year.
Specifically, the fund manager is not satisfied with the progress of Deutsche’s Strategy 2015+ reform programme. This is not the first time Hermes has said it was concerned with progress of Strategy 2015+, which covers culture change, how the bank deals with pending litigation and investigations, and delivery of targets.
Hans-Christoph Hirt, director of Hermes EOS, says the bank’s supervisory board is urged to review the composition of the management board, taking its performance over the last three years and its new strategy into account.
“We have previously queried with the bank itself the suitability of Juergen Fitschen and Anshu Jain, the bank’s two chief executives, to lead Deutsche’s culture change, given their long tenure in key leadership positions including at the investment bank,” says Hirt.
He goes on to say that the development of Deutsche’s share price and the total shareholder return since Fitschen and Jain took over three years ago seem to reflect the failure of Strategy 2015+.
Hermes is also concerned with the rigging of interbank offered rates, which the bank was fined a total of $2.5 billion (€2.2 billion) for by regulators in the US and the UK.
Hermes’ view is that the fines reflect the severity of the misconduct by Deutsche’s employees, and the bank’s inadequate response to investigations.
It is quite rare for traditional asset managers to openly berate boards. Public criticism is more associated with activist hedge funds.
Deutsche Bank had not responded to a request for comment at time of publication.
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