Commerzbank & Cerberus: The end of Rhenish capitalism (II)

Ever since the Corona crisis everyone has been talking about social responsibility. But in practice things look different: Shareholder value apologists have won the next big victory in the shape of Cerberus

“We do not work with activists,” Ingo Speich from Deka emphasized in a recent Handelsblatt interview. The interests are “too different”, especially in environmental and social issues. These levers have a “rather long-term effect”, said Speich – and are therefore not the “thing” of activist shareholders.

Unfortunately, few investors distinguish themselves so clearly from the aggressive representatives of their guild. Time and again, individuals succumb to the temptation to exchange short-term gains for long-term opportunities. This regularly leads to ominous alliances – for example at ThyssenKrupp, where activists from Cevian Capital at times even had the Krupp Foundation at their side.

This led to CEO Heinrich Hiesinger and chief controller Ulrich Lehner throwing in the towel. “The end of Rhenish capitalism”, we titled it exactly two years ago. For the departures were also a defeat for a corporate governance culture based on the model of the social market economy (and which is often referred to as the stakeholder value principle).

Give decision-makers more time for restructuring!

Now, the CEO and Supervisory Board of another traditional group have announced their withdrawal – again under pressure from an aggressive shareholder who acted like an activist: financial investor Cerberus harshly and publicly criticized Commerzbank’s management. CEO Martin Zielke did not cut costs decisively enough, he said profitability urgently needed to increase.

Despite the exorbitant demand for two supervisory board mandates and considerable conflicts of interest (Cerberus is a shareholder and at the same time advisor to banks), the Americans apparently found numerous supporters among the shareholders. Even politicians joined the chorus of critics.

Of course, Commerzbank has made no measurable progress in the past 15 months and has made a few mistakes. And whether Zielke and Schmittmann were rashly “deserting the flag”, as one esteemed commentator put it, is something we do not yet want to judge conclusively.

What is clear for us, however, is this: In times of low interest rates, corona and digital transformation, banks need time for restructuring – and not nervous shareholders driven by self-interest, thinking in quarters. In any case, we are curious to know whether the bang in Frankfurt was a liberating blow. Or, as at ThyssenKrupp, the beginning of the next crises.