One thing to start: JPMorgan Chase shareholders have voted against the bank’s executive pay plan, delivering a stinging rebuke to chief executive Jamie Dimon and his management team.
Deutsche Bank enlists an unexpected dealmaker after a decade of chaos
For a lender that has spent the last 10 years battling scandals and shrinking assets, Deutsche Bank has also had its moments of luck.
There was the time in 2018 when, as the FT revealed, Deutsche thinly dodged a bullet in the form of Bill Hwang, whose collapsed family office Archegos Capital Management almost became its largest shareholder.
More recently, Germany’s largest bank last month reported its highest profits in almost a decade, just as its controversial chair Paul Achleitner prepares to step down when his second five-year term expires.
Much of those winnings can be attributed to Deutsche lifer Christian Sewing, who spearheaded what one JPMorgan analyst described as a “bold and for the first time not half-baked” revamp of the bank’s derelict balance sheet.
Shareholders hope Achleitner’s final bow will set the stage for a new, less tumultuous era at the bank, as the FT’s Olaf Storbeck reports in this Big Read.
Continuing the winning streak will fall on Sewing’s ability to meet ambitious growth targets, which look daunting in the face of rising interest rates, and the recent decision by Capital Group, one of Deutsche’s largest investors, to dump its €1.75bn stake in the lender.
Sewing’s other big promise — positioning Deutsche as a formidable contender in the next big takeover battle to hit the European banking sector — appears even loftier. Even as politicians and regulators call for consolidation in the highly fragmented banking market, which many believe has become too dependent on US banks, coronavirus pandemic travel restrictions and the war in Ukraine have made it difficult to push deals across the line.
One person that could help bolster Sewing’s M&A ambitions is Dutch insurance veteran and Citigroup board member Alex Wynaendts, who was selected in part for his dealmaking experience as head of Aegon. The Dutch insurer struck 87 transactions during his tenure from 2012 to 2020, according to a Reuters analysis of Refinitiv data.
But some shareholders fear he isn’t the best fit for the job. Though a seasoned dealmaker, Wynaendts’ last banking job ended in 1997 when he was climbing the ranks at ABN Amro.
Alexandra Annecke, a portfolio manager at Deutsche shareholder Union Investment, told the FT that she wouldn’t vote for him on the guise that the bank should’ve added him to the board earlier so that he could learn the ropes. She also argued that he has too many other board commitments.
Still, Wynaendts has plenty of opportunities to prove himself to the clubby ranks of European banking.
Since Achleitner joined in 2012, Deutsche has generated total net losses of €12bn, endured a 65 per cent fall in share price, and fired three chief executives. Two former bankers served jail sentences for involvement in various scandals, while others remain under criminal investigation.
Sealing a higher approval rating than his successor is one thing. Wynaendts’ ability to engineer the kinds of deals that could transform Deutsche into an institution to rival US heavyweights like JPMorgan and Goldman Sachs is another.
Lawsuits secured?
In his bid to take Twitter private, Elon Musk can celebrate having much of the “funding secured” to finance the $44bn effort. But the world’s richest man is still a novice when attempting large takeovers.
The latest twist in the saga of Musk’s bid for Twitter came on Tuesday when its proxy statement showed the billionaire had started to discuss a takeover as early as March 27.
But when Musk first disclosed his initial 9.2 per cent stake on April 4, he characterised it as passive holding, filing a 13G, which experts told DD was misleading.
“Clearly, it is a failure to make a proper filing,” said Brian Quinn, an associate professor of law at Boston College.
Any investor owning more than 5 per cent in a publicly listed US company is required to disclose the stake to inform other shareholders that they may seek to control or influence the company.
Musk rectified the situation a day later by converting the position to an activist stake by filing a 13D. But even then Musk’s disclosures steered the public astray.
On April 9, days after being invited inside Twitter’s boardroom, Musk backtracked and told the company he “would be making an offer to take Twitter private”, the filings on Tuesday showed.
However, Musk’s 13D filing dated April 11 contained no explicit reference to the possibility of discussing “potential business combinations and strategic alternatives” with Twitter. His hostile bid for the company was formally unveiled on April 14.
“[Musk] claimed to have ‘no present plans or intentions’ to engage in a merger transaction, but according to the proxy statement, two days earlier, he had actually informed the Twitter board that he planned to make an offer to take Twitter private,” explained Ann Lipton, an associate professor at Tulane Law School.
Both Lipton and Quinn agreed that the prospect of a hefty fine from the Securities and Exchange Commission is unlikely. But the threat of costly shareholder litigation remains.
Musk continues to fight a shareholder suit over his infamous “funding secured” Twitter posts in 2018, when he attempted to take Tesla private. And Twitter shareholders have already sued Musk over his takeover efforts, citing his late disclosure of an over 5 per cent ownership stake.
The plaintiff’s bar may now have a field day combing through the documents released by Twitter.
The social media platform is also using aggressive language to defend its merger agreement, despite Musk’s writing on Twitter that he intends to put the deal on “pause”, stating it would enforce the deal as per the agreement signed by both parties at the $54.20 price tag.
As is often the case, Musk’s M&A efforts cause litigation, underscoring that the man who would reinstate Donald Trump’s Twitter account if he won control of the company still has more to learn about the “art of the deal”.
Trumps’ bankruptcies loom over his Spac deal
Investors can’t say they weren’t warned.
Trump Media & Technology Group, the media company started by Donald Trump that’s going public via a Spac, treated would-be shareholders to a list of the former president’s past failed business ventures, from casinos to universities and even steaks.
The disclosures came in a registration statement filed with the Securities and Exchange Commission on Monday by Digital World Acquisition Corp, the blank-cheque company that is merging with TMTG
DWAC’s disclosures were attached to a stark warning: “There can be no assurances that TMTG will not also fail.”
The former president’s media upstart pitches itself as a way for investors to make money from Trump’s plan to “cancel ‘cancel culture’”.
In an effort to attract more subscribers, TMTG has inked an agreement with Trump for access to his social media posts at least six hours before they appear on other platforms. There are a few exceptions to the deal, including political messaging or “get out the vote” efforts.
The media group will be competing in a crowded field against established Big Tech players like Twitter and Facebook. Trump’s potential readmission on to Twitter — should Musk’s deal go through — could be detrimental to the company’s future, DWAC stipulated, despite the fact that the former president has publicly vowed not to rejoin.
Whatever happens, the Spac’s backers stand to make a fortune.
The founder shares they paid $25,000 for had a market value of $357mn at the end of March. Not a bad rate of return for a Trump venture.
Job moves
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Frédéric Oudéa, Europe’s longest-serving major bank chief, will step down as head of Société Générale next May.
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Roger Whiteside has stepped down as chief executive of Greggs after nine years at the helm of the high street bakery chain. He has been replaced by Roisin Currie, the company’s retail and property director who previously held director roles at Asda.
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Citigroup has promoted Toby Ali to head of venture capital and family offices for Europe, the Middle East and Asia. A search for his replacement as co-head of loans and leveraged finance for Emea is under way.
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Aviva has appointed Mike Craston as a non-executive director. He formerly worked as chief of America and Asia at Legal and General.
Smart reads
Wishful thinking On the surface, Goldman Sachs’ new unlimited vacation programme appears to be a step towards a more relaxed culture on Wall Street. Seasoned investment bankers know it won’t be that simple, Bloomberg writes.
Welcome to Japan Apollo Global Management followed its rivals KKR and Carlyle to Japan. The firm’s chief Marc Rowan tells Nikkei Asia that the country’s corporate culture meshes well with Apollo’s “purchase price matters” investment philosophy.
Setting precedent Being young isn’t an excuse for wrongdoing. But the scandal at KPMG over its audits of collapsed contractor Carillion should leave the City’s junior accountants feeling nervous, the FT’s Cat Rutter Pooley writes.
News round-up
UniCredit and Commerzbank merger talks derailed by Ukraine war (FT)
Saudi Aramco weighs IPO of trading unit amid oil boom (BBG)
New York mayor urges Jamie Dimon to ride subway to work (FT Interview)
KKR boosts renewable power presence with $2.2 billion deal for ContourGlobal (Reuters + Lex)
Russian media mogul’s Spacs avoid US trading suspensions (Wall Street Journal)
Allianz agrees $6bn settlement over scandal-hit US funds (FT)
LIC/India: biggest ever listing marks IPO peak (Lex)