A signs stands above the entrance to a Deutsche Bank AG bank branch in Frankfurt, Germany, on Monday, July 4, 2016. Krisztian Bocsi | Bloomberg | Getty Images

Deutsche Bank executives met with shareholders Thursday, as the bank's tumbling share price and growing backlog of scandals place the board firmly in the firing line. The embattled German lender saw its share price hit a record low Thursday, down nearly 5% since the start of the year. On Monday, UBS downgraded its stock to a "sell" rating from "neutral" and cut its target price from 7.80 euros ($7.45) to 5.70 euros.

Shareholder grievances

Reports this week suggested substantial shareholders will push for the removal of Deutsche Chairman Paul Achleitner ahead of his term expiry in 2022. However, CNBC sources said Tuesday that the bank expects Achleitner to retain his premiership with around 60% shareholder approval. Deutsche also faces pressure to trim its investment banking division following the collapse of merger talks with domestic rival Commerzbank. Investment banking (IB) is the specific division relating to the creation of capital for other companies, governments or entities. Addressing shareholders Thursday, CEO Christian Sewing said the bank will accelerate its transformation by "rigorously focusing our bank on profitable and growing businesses which are particularly relevant to our clients." "We're prepared to make tough cutbacks," he said, without elaborating on where the cuts would occur. The UBS downgrade note highlighted that Deutsche's IB would have been a "key beneficiary" of the deal with Commerzbank, helping reduce funding costs and spreads, and balance the overall profile. Influential shareholder proxy Institutional Shareholder Services (ISS) has advised its members to vote against "discharging" Deutsche's board, the vote of confidence under the German corporate code. It claimed that shareholders had borne the brunt of monetary and reputational damage inflicted by a series of scandals, principally resulting from the bank's failure to uphold anti-money laundering (AML) controls. Deutsche has been the source of much negative publicity in recent years — from settlements with the U.S. Department of Justice, to management reshuffles, weak earnings, constant restructuring, merger speculation and steep stock price falls.

The bank defended its risk and control system on the grounds that it had "significantly improved" over the last three years, but the reputational cloud hanging over the bank has only darkened in recent weeks after reports that it prevented the flagging of suspicious transactions involving entities linked to President Donald Trump and son-in-law Jared Kushner.

Trump dealings

The latest scandal to engulf Deutsche Bank came after a New York Times report alleged Deutsche Bank senior management ignored reports from employees about transactions in 2016 and 2017 which triggered its automated controls against illicit activity. The transactions allegedly related to entities controlled by Trump and Kushner, but the bank staunchly denied the report, saying in a statement that the "suggestion that anyone was reassigned or fired in an effort to quash concerns relating to any client is categorically false." The president's relationship with Deutsche Bank has long been a source of scrutiny. Trump sued the bank last month to block its compliance with congressional subpoenas seeking access to his financial records.

U.S. President Donald Trump walks toward journalists as he departs the White House for a campaign rally in Pennsylvania May 20, 2019 in Washington, DC. Chip Somodevilla | Getty Images

A federal judge in New York City on Wednesday said Deutsche Bank can turn over financial documents related to President Donald Trump and his businesses in response to subpoenas from two Democrat-led House committees. Judge Edgardo Ramos' ruling came after a hearing at which lawyers for Trump, his three older children, Donald Jr. Eric and Ivanka, and the Trump Organization argued that the subpoenas to the two banks should be quashed. An appeal of the decision is all but certain. Deutsche Bank been a consistent principal lender for Trump's real estate dealings, the president tweeting angry retorts Monday to suggestions that other banks refused to work with him due to a lack of creditworthiness, by claiming that he "didn't need money."

Money-laundering, rate-rigging scandals