Friday, August 14, 2020

Unrest on Commerzbank’s Supervisory Board

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Vor the Commerzbank Supervisory Board meeting this Monday is wild speculation. Some media reports that employee representatives on the supervisory board rejected Hans-Jörg Vetter, whom the federal government, as the largest shareholder, is said to want to propose as the new chairman of the supervisory board. However, two supervisory board members of the employee wing said at the weekend independently of one another in confidential conversations by the FAZ that they had not yet formed a final opinion on Vetter. The former CEO of Landesbank Berlin and Landesbank Baden-Württemberg will introduce himself to the employee representatives on the Commerzbank Supervisory Board on Monday morning. Subsequently, a common line of workers will be set for the crucial meetings in the afternoon. Both supervisory boards are by no means brushed up for riot, but openly constructive.

Criticism of Vetter may therefore be scattered behind the scenes by disappointed candidates who have not been successful; and Cerberus, the second largest Commerzbank shareholder, who calls for two representatives on the Supervisory Board. The financial investor had triggered Commerzbank’s leadership crisis with two public letters with harsh criticism of the Executive Board. Now shareholder Cerberus, who has owned around 5 percent of Commerzbank shares since July 2017 and has since lost around 450 million euros, is putting the mood against Vetter.

According to Cerberus, Vetter did not push the costs radically enough when he freed the former Bankgesellschaft Berlin from failed real estate commitments in the 2000s and from LBBW from 2009 to 2016 from its difficulties in the financial crisis. Vetter actually cut 2,500 jobs at LBBW, almost a quarter of the workforce. Cerberus also complains to Vetter that as head of the board of public-law Landesbanken he has had no experience with shareholders on the capital market who, like Cerberus, rely solely on returns. In addition, says Cerberus, Commerzbank must adapt its business model so that it survives in the digital world. There are doubts here that Vetter, who will be 68 years old in a few weeks and has been out of operational banking for four years, is the right person for this.

However, while Cerberus has no vote on the supervisory board, the employee representatives act as if they were very aware of the opportunities, but above all of the limits, of participation. If the representatives of the capital side propose Vetter as a new member of the Supervisory Board, the employees could not prevent that. For his election as chairman of the supervisory board, he needed a two-thirds majority in the supervisory board – but only in the first ballot. One thing is clear: one of the ten shareholder representatives will be the new chairman of the supervisory board.

The employee representatives will therefore carefully consider whether and to whom they throw the gauntlet. Especially since what the current Chairman of the Supervisory Board, Stefan Schmittmann called a “well-ordered process” a month ago, does not work as such even if Vetter were finally elected on Monday. Because this would first have to be appointed by the court as a new member of the Supervisory Board. This usually takes a few hours, a maximum of 14 days. However, since Schmittmann wants to resign his mandate on Monday, his deputy, the general works council chairman Uwe Tschäge, will probably take over the chairmanship of the supervisory board for a short period. The 53-year-old Rheinländer Tschäge has been a works council member since 1991 and on the Commerzbank Supervisory Board since 2003. He is considered prudent and confident. Nevertheless, it would be a prestige success for the employees and a sign of the management chaos at Commerzbank if Tschäge were to remain chairman of the Commerzbank supervisory board.

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