Deutsche Bank AG (DB) shares fell to the bottom of the German market Monday amid reports of a rift between CEO John Cryan and chairman Paul Achleitner over a meeting with the bank's biggest investor and the overall strategy of Germany's biggest bank.
HNA Group Co, a China-based investor that holds a 9.9% stake in Deutsche Bank through an Austrian asset management firm based in London, has reportedly sought a face-to-face meeting with Cryan on two occasions, Bloomberg news has reported, while the Wall Street Journal has suggested the Cryan and Achleitner are at odds over the relationship between the bank and its biggest shareholder.
Deutsche Bank shares were marked 1.22% lower in the opening hour of trading to change hands at €14.55 each and extend their three month decline to just over 12.7%. The Stoxx Europe 600 Banks index, the region's benchmark for financial sector shares, is essentially unchanged over the past three months after rallying 6.8% since early September on the back of speculation that the European Central Bank will begin the slow process of monetary policy tightening in the months ahead.
Deutsche Bank, however, has missed most of the market's recent advances amid concerns over its newly-drafted business strategy, spearheaded by Cryan, and the strength of its balance sheet after an $9 billion capital injection earlier this year.
Germany's largest lender posted weaker-than-expected second quarter revenue over the summer amid what it called "muted" global capital markets and lowered its full-year guidance based on "our expectation that market volatility and related client activity remain muted, whereas our macro outlook remains broadly positive."
HNA's stake has proven controversial, however, after it was revealed through Securities and Exchange Commission that UBS AG helped finance the increase -- from just over 3% to just under 10% in May of this year -- with complex derivatives trades that could theoretically reduce the cash HNA had to commit to the holding while simultaneously protecting itself against a potential decline in the value of the shares.
The process was also flagged by the ECB, which acts as Europe's banking regulator and, according to Germany's Sueddeutsche Zeitung, is considering an "ownership control procedure" that would probe the HNA stakebuild.
"The approval process aims to ensure that only suitable shareholders enter the banking system in order to prevent any disruptions to the smooth functioning of the banking system," according to the ECB's website.