Hermes EOS: Views on Deutsche Bank

Dr Hans-Christoph Hirt, Director at Hermes EOS, comments on recent events at Deutsche Bank

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.

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