(Adds quotes from shareholders' meeting)
By Thomas Atkins and Arno Schuetze
FRANKFURT May 22 Deutsche Bank AG
defended plans to raise 8 billion euros ($11 billion) in equity
capital on Thursday, as its top executives faced angry investors
at the annual shareholders' meeting, less than a week after
announcing the surprise plan.
Germany's largest bank launched the share issue only weeks
after first hinting it was unable to retain sufficient profits
to fortify its finances ahead of the industrywide health checks
due to be conducted by European regulators this year.
"We know some of you are sceptical. Some of you may ask, why
should we trust this team to deliver?," co-Chief Executive Anshu
Jain told thousands of shareholders at Frankfurt's convention
centre, while outside the building various protesters dressed as
clown fish and pigs and others riding a cardboard tank, accused
the bank of unethical behaviour.
"You should trust us because the transformation of Deutsche
Bank is working, because we are doing what we said, step by
step, because we're strengthening capital and reducing risk", he
"In the banking industry there will be winners and losers,
and we are systematically positioning Deutsche Bank to be a
winner," he added.
Chairman Paul Achleitner told the meeting the bank aimed to
make staff and clients "proud of Deutsche Bank again".
Jain, who has been portrayed by some shareholders in the
past as being a detached 'Anglo-Saxon' investment banker with
little knowledge of Germany's social-market economy, for the
first time addressed the bank's owners at length in German.
"Both in our business environment and within Deutsche Bank
some challenges were tougher than we anticipated," the
Indian-born British citizen told the meeting, attended by some
Deutsche Bank also came under attack over its share price,
which has fallen by about 15 percent in the past 12 months,
while the Stoxx Europe 600 banking sector index is up 13
"When is this nightmare finally going to end?" fund manager
Ingo Speich from Union Investment said. "Stockholders and
investors are losing their patience with legal battles, fines
and breaches of corporate governance and compliance.
"Much investor trust has been wasted. The capital hike is
not helping," Speich said.
LACK OF PROGRESS
Shareholder approval is not required for the capital raising
but some investors have voiced anger over the issue and with a
lack of progress on resolving a long list of investigations that
has dogged the bank since the 2008-2009 financial crisis.
The bank said it still faces around 1,000 major lawsuits
that have a value of over 100,000 euros.
"Our Deutsche Bank today is a huge law office with banking
operations attached," Klaus Nieding from shareholder
organisation DSW said.
The bank has already had to pay out more than 5 billion
euros ($6.9 billion) over the past two years in settlements and
fines stemming mostly from the financial crisis, and has set
aside another 1.8 billion euros in anticipation of more pain
But management has pointed to "tectonic shifts" that have
opened up opportunities in investment banking. European rivals
including UBS and Barclays have withdrawn
from areas such as bond trading, where Deutsche believes it can
succeed as a big European player on a stage dominated by the
likes of Goldman Sachs and JPMorgan.
Separately, shareholders were expected to approve a proposal
permitting senior staff to receive bonuses worth twice base pay,
something the bank says is critical to remaining a competitive
employer and to keeping its costs flexible.
European Union rules say bankers' bonuses cannot exceed
their annual fixed salary, or twice that if shareholders
approve, to curb the sort of excessive risk-taking blamed for
the financial crisis.
The bonus cap is one of the most high-profile rules approved
by the 28-country bloc following public anger over high pay at
banks, many of which were propped up by taxpayers in the crisis.
DSW's Klaus Nieding said that compensation for the
investment banking division in 2013 totalled 4.5 billion euros,
with almost half of that being for bonus payments.
"If that's still not enough for people, especially for the
investment bankers ... then let them move on, Mr. Jain!" he
(Editing by David Holmes and Greg Mahlich)