Deutsche Bank executives prepare for the most controversial shareholder meeting to date

Deutsche Bank executives can expect an explosive rally with shareholders on Thursday, as falling stock prices at the bank and the growing number of scandals accumulate place the board in the crosshairs.

The troubled German lender saw its course hit record lows on Thursday, down nearly 5% since the beginning of the year. Monday, UBS has reduced its title of "neutral" to "sell" and reduced its price target from 7.80 euros to 7.75 euros to 5.70 euros.

According to reports released this week, many shareholders would like Deutsche President Paul Achleitner to be sacked before the expiry of his term in 2022. However, CNBC sources said on Tuesday that the bank is not going to be able to sell it. expects Mr. Achleitner to retain his position as prime minister with the approval of approximately 60% of shareholders.

Deutsche is also facing pressure to reduce its investment banking division following the collapse of the merger talks with its domestic rival Commerzbank. The investment bank (IB) is the specific division related to the creation of capital for other companies, governments or entities.

The UBS demotion note pointed out that Deutsche IB would have been a "key beneficiary" of the agreement with Commerzbank, thus helping to reduce costs and funding gaps and to balance the profile. global.

The power of attorney of influential shareholders Institutional Shareholder Services (ISS) advised its members to vote against the "dismissal" of the board of directors of Deutsche, the vote of confidence according to the code of German companies. It claimed that the shareholders had suffered the most currency and reputational damage caused by a series of scandals, resulting mainly from the bank's inability to enforce the anti-money laundering (AML) controls.

Deutsche has been the source of much negative publicity in recent years – from settlements with the US Department of Justice up to management reshuffles, weak profits, constant restructuring, mergers speculation and strong mergers. falls in stock prices.

The bank has defended its risk and risk control system by claiming that it has "significantly improved" over the last three years, but the cloud of reputation that hovers over the bank is not clear. is clouded that in recent weeks after reports that he would have prevented the reporting of suspicious transactions involving entities linked to President Donald Trump and son-in-law Jared Kushner.

The latest scandal that hit Deutsche Bank came after a New York Times report alleged that Deutsche Bank's top management had ignored the information communicated by employees regarding transactions in 2016 and 2017 that had triggered its checks automated against illicit activities.

The transactions would be linked to entities controlled by Trump and Kushner, but the bank categorically denied the report, stating in a statement that "the suggestion that anyone would have been reassigned or fired in order to eliminate the concerns of 39, a customer is totally wrong.

The president's relationship with Deutsche Bank has long been a source of surveillance. Last month, Trump filed a lawsuit against the bank to prevent it from complying with Congressional summonses asking it to access its financial records.

A federal judge in New York Wednesday said Deutsche Bank could hand over financial documents relating to President Donald Trump and his activities in response to subpoenas from two House committees led by Democrats.

Judge Edgardo Ramos' decision was issued at the conclusion of a hearing during which Trump's lawyers, his three older children, Donald Jr. Eric and Ivanka, and the Trump organization argued that subpoenas to both banks should be set aside. An appeal of the decision is almost certain.

Deutsche Bank has been a leading lender for Trump's real estate transactions, said Monday the president tweeted angry at banks who reportedly refused to work with him due to a lack of solvency, saying that he "did not need money".

Last month, a confidential internal memo published by The Guardian revealed that Deutsche Bank could be prosecuted for the massive Global Laundromat scheme, used by Russian criminals linked to the Kremlin and KGB to transfer money. In the Western financial system between 2010 and 2014. A The spokesman told CNBC that the bank "remains committed to providing the appropriate information to all authorized investigations".

In November 2018, German police, prosecutors and tax inspectors raided the bank's offices in Frankfurt as part of a money laundering investigation following the Panama Papers scandal. . Deutsche's bosses partially attributed the loss in the fourth quarter to the negative publicity that resulted.

In 2017, US and UK regulators fined $ 630 million as a result of money laundering charges by Russia between 2011 and 2015. According to the regulators, the mechanisms Deutsche's anti-money laundering controls have not allowed to detect dummy transactions worth up to $ 10. billion because they were unable to identify the customers involved in the transactions and the origin of the money.

The decision comes just two weeks after Deutsche signed a $ 7.2 billion deal with the US Department of Justice (DOJ) for its sale and pooling of mortgage-backed securities in anticipation of the global financial crisis.

Two years ago, the leading German lender had already been fined a record $ 2.5 billion as part of the Libor scandal investigation, involving interest rate regulators, covering regulators on both sides of the Atlantic.

Also in 2015, following the Libor fines, the bank agreed to a $ 258 million batch settlement with US regulators for violation of sanctions against several countries, including Libya, Iran and Sudan.

– Annette Weisbach of CNBC contributed to this report.