Deutsche Bank's Royal Blessing

Qatari support for Achleitner means radical change is unlikely

Appropriately for a royal investor, Qatar's Sheikh Hamad bin Jassim bin Jabr Al Thani is opting for stability over rebellion at Deutsche Bank. For less patient shareholders, it means radical change at the lender looks ever more elusive.

The former Prime Minister of Qatar and Deutsche Bank's second-biggest shareholder on Wednesday publicly backed the lender's supervisory board chairman, Paul Achleitner, whose term runs out in 2017. Manager Magazin had reported earlier this month the Sheikh's opposition to a second term.

Paramount, a fund the Sheikh controls, said it wouldn't be "in shareholders' interests" to lose Achleitner. For good measure, it added that he was "an important factor" behind Al Thani's decision to pour about 2 billion euros ($2.3 billion) into the German bank as part of a 2014 fundraising.

Plunging Stock

Deutsche Bank shares have tumbled by more than 50% in the past year

Source: Bloomberg data

This effusive support looks odd considering Deutsche Bank's shares have lost more than half their value in the past year amid mounting losses, litigation costs and concerns over the economic outlook. This year is likely to bring yet more losses. If ever there was a time to call for heads to roll, surely now would be it.

But Al Thani clearly takes the view more instability won't help. Deutsche Bank has already overhauled its ranks of executives in the past year, installing John Cryan -- who himself served alongside Achleitner on the supervisory board -- as CEO. Given Cryan has already laid out a strategy to cut 9,000 jobs by 2018, bringing in a new chairman would be at best a distraction or, at worst, a new source of infighting.

Bad Books

Deutsche Bank shares trade at a steep discount to book value

Source: Bloomberg data

Hastily replacing Achleitner would cost the Qatari a qualified and influential ally on Deutsche Bank's supervisory board. Helping to keep him in place will allow Al Thani to continue to exert influence over the bank, even though it lacks its a board seat.

Achleitner, 59, may not be an outsider, but is likely to be Al Thani's best hope for change. As chairman, has shown teeth before, replacing three board members in 2013. He's well-connected, too, serving on the supervisory boards of Bayer and Henkel. As a banker at Goldman Sachs, he advised Deutsche Bank on its $9 billion purchase of Bankers Trust almost two decades ago (an acquisition the lender has since had to write down).

Achleitner's term still has a year to go, during which time he will come under even greater pressure to revive the lender's fortunes. If Deutsche Bank takes longer than expected to resolve its two largest legal cases -- one of which involves alleged money laundering at its Russian unit -- and fails to deliver on its cost-cutting plans, even the chairman's most ardent supporters may find it difficult to back him.

But Al Thani clearly believes a revolution now won't deliver shareholder value. Radical change thus looks unlikely, and investors should prepare for a long slog.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

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    Lionel Laurent in London at

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