May 19, 2016 / 8:57 AM / in 2 years

Deutsche Bank fends off criticism, sees big legal bill in 2016

FRANKFURT (Reuters) - Deutsche Bank (DBKGn.DE) drew scathing criticism from shareholders on Thursday over its dramatic share price decline, costly legal wrangles and public squabbling among its directors.

Deutsche Bank co-CEO Juergen Fitschen addresses the bank's annual general meeting in Frankfurt, Germany, May 19, 2016. REUTERS/Kai Pfaffenbach

Chairman Paul Achleitner defended his record and sought to head off criticism he was too slow to push for changes in top management and strategy at Germany’s biggest lender, which has seen its share price fall by half over the last year and posted a record $7.6 billion loss in 2015.

“I am sticking to my duty and to my responsibilities,” Achleitner told 5,400 shareholders at the annual meeting.

“I am standing here today and I would stand here again if my post were due for re-election,” said the 59-year-old Austrian, chairman since 2012.

Chief Executive John Cryan warned shareholders he expects further significant legal charges this year. Deutsche Bank has already set aside provisions of 5.4 billion euros ($6 billion) to settle pending litigation.

“Litigation expenses of this magnitude are completely unacceptable,” Cryan said, to broad applause from shareholders.

Claims filed by individuals, companies and regulators against Deutsche have related to mis-selling of subprime loans and manipulation of foreign exchange rates or gold and silver prices. Other lawsuits were over the rigging of borrowing benchmarks Libor and Euribor.

Cryan has said he hopes to have settled Deutsche’s main legacy legal problems by later this year but new suits are still cropping up.

Deutsche was named on Wednesday as one of five major banks in a private U.S. lawsuit alleging they conspired to rig prices worldwide in a more than $9 trillion market for bonds issued by government-linked organizations and agencies.

Deutsche Bank, struggling to cut through the slew of legal tangles and adapt its business to a more highly regulated, low interest rate banking environment, needed to put in place a new strategy and then find the right leaders to execute it, rather than the other way around, Achleitner said.

“We in the supervisory board are now confident that Deutsche Bank is on the right track,” he said.

PROTEST

Investors, infuriated by shrinking profits, a suspended dividend and the dramatic stock price drop, vented their views while a small group of protestors gathered outside.

“After a decade of mismanagement, Deutsche Bank is today a restructuring case,” said Ingo Speich of large shareholder Union Investment.

“The share price is a disaster,” Speich added, pointing out that Deutsche’s current market capitalization of around 20 billion euros is less than the sum of the three capital increases it undertook since the financial crisis.

Shareholder speeches reserved most of their ire for previous management, while Cryan, a Briton who took over as chief executive last July, won backing as the right man - along with his newly installed executive team - to restore Deutsche Bank’s earnings prowess.

“We expressly welcome this new beginning,” said Andreas Thomae, fund manager at Dekabank.

Controversy flared in the weeks before the shareholder meeting after non-executive director Georg Thoma, who was investigating earlier scandals, left after coming under fire from fellow directors for being over-zealous.

Some shareholders criticized the bank’s supervisory board for not settling the issue out of the public spotlight.

Deutsche Bank’s shares closed 1.3 percent higher on Thursday, compared with a flat STOXX Europe 600 banking index .SX7P.

($1 = 0.8929 euros)

Reporting by Jonathan Gould, Andreas Kroener and Alexander Huebner; Editing by Tina Bellon, Greg Mahlich and Adrian Croft

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