FRANKFURT (Reuters) - Cerberus, one of Deutsche Bank's DBKGn.DE largest shareholders, will no longer provide paid advice to the bank on how to run its business, a person with knowledge of the matter said on Monday, a role that has been criticized for potential conflicts of interest.

FILE PHOTO: The logo of Deutsche Bank is pictured on a company's office in London, Britain July 8, 2019. REUTERS/Simon Dawson

Cerberus, a U.S. private equity firm, bought a 3% stake in Germany’s flagship bank in 2017. The following year, Cerberus’ consulting arm also began advising the bank on how to cut costs and find new sources of revenue, for which Deutsche paid fees.

That mandate, criticized by some other large shareholders in the bank, is ending, the person said on condition of anonymity. The person said the agreement had reached its natural conclusion.

A Deutsche Bank spokesman said Cerberus’ advisory business “has been a great support since mid-2018 and helped us to get our deep transformation going. Now it is all about execution.”

At the bank’s annual general meeting this year, Deka Investment, another big Deutsche shareholder, pointed to Cerberus as a “problematic” example of Deutsche’s corporate governance.

“Is this a conflict of interest?” Deka portfolio manager Andreas Thomae asked the bank’s chief executive officer, Christian Sewing.

Sewing defended the relationship, noting that Cerberus, as an advisor and owner privy to insider information, was bound by laws designed to prevent insider trading. Either party could exit the consultant contract with one month’s notice, he said.

An exit from the contract in theory means Cerberus would have more leeway to increase or decrease its stake, which has lost more than 50% of its value since it was announced.

“Cerberus is very supportive of the developments taking place under” Sewing, a spokesman for Cerberus said. “We remain confident in his team’s ability to execute on the restructuring plan to improve the bank’s financial and operating performance.”

As a Deutsche Bank shareholder, Cerberus had pushed for a merger with Commerzbank CBKG.DE, in which it has a 5% stake, people familiar with the matter have said. Those talks failed, and Deutsche Bank is now in the midst of a major revamp, cutting staff and shedding business.

In addition to advice on cost cuts, Cerberus has advised the bank on how to generate more money from its liquidity reserves.

In 2018, Deutsche paid a single-digit million euro figure for the advice of a Cerberus team lead by former JPMorgan executive Matt Zames, Sewing told shareholders at the annual general meeting. The bank had expected to pay the same in 2019, he said.