The sick Hermann Merkens does not return. The search for a successor is difficult because of the rebellious shareholders Petrus and Teleios. Another board member could leave at the end of May.
MIn the midst of a power struggle over the composition of the Supervisory Board, Aareal Bank has to find a new CEO. The sick Hermann Merkens, who has been resigning his position as CEO since November, will not return “contrary to original expectations”, said Aareal Bank. Merkens’ contract will be terminated on April 30th. Merkens, born in 1966, took over the chairmanship of the commercial real estate financier from Wolf Schumacher in 2015.
The chairwoman of the supervisory board, Marija Korsch, made this decision, which was surprising at the time. The former partner of the Metzler bank is now also challenged: Since Merkens’ final departure did not come as a surprise, “very promising talks have already been held” with successor candidates, Korsch said.
Peter finds allies
However, Korsch himself is controversial. At the Annual General Meeting on May 18, the shareholder Petrus Advisors is calling for three of the eight supervisory boards on the capital side, including von Korsch, to be voted out. The Swiss fund Teleios supports this demand, as Bloomberg first reported and as has been confirmed in financial circles. Teleios did not want to give the FAZ a comment on this.
Instead of Korsch, Petrus and Teleios, who together have at least 15 percent of Aareal shares, propose the former Personnel Director of Unicredit (Hypo-Vereinsbank) Heinz Laber. From the profile, Korsch, as the new CEO, is likely to be looking for someone whose strategic line is rather “business as usual” – despite the difficult commercial property markets in which Aareal has financed many hotels and retail properties. The shareholders Petrus and Teleios, on the other hand, are calling for the complete sale of the Aareon IT division in the end to break up and reorganize the group. Despite the undecided power struggle, Korsch announced that the search for a new CEO was “at an advanced stage”. However, Aareal Bank will only be able to sign a new CEO after the future strategy has been clarified.
Headhunter downsizes candidate list
It is reported that a commissioned headhunter is still holding interviews with around five external candidates. In addition, CFO Marc Hess is considered a promising internal candidate for the chairmanship of the board.
With an internal solution, Aareal Bank could meet another demand of the rebellious shareholders Petrus and Teleios: to downsize the board, which with six members is considered to be oversized for a bank with around 40 billion total assets. However, there is no internal candidate on the board who could take over the finance department instead of Hess. Nevertheless, Aareal Bank announced that the Supervisory Board was also reviewing the size of the Board of Management and that results would be available in the next few weeks.
Knopek’s contract expires
Aareal Bank could thus allude to the fact that the contract of Dagmar Knopek, who has been responsible for loan processing on the Board of Management (“back office”) since 2013, expires at the end of May 2021, according to information from the FAZ. So far it is not known that Knopek’s contract, who was born in 1958, would be extended – this normally happens for board members just under a year before the contract expires.
However, it is unlikely that the Petrus and Teleios funds will be satisfied with downsizing Aareal’s board of directors. Lawyers and the financial supervisory authority Bafin have long been involved in the power struggle. From Aareal Bank’s point of view, Petrus has published contradicting information on its shareholdings in the past. In particular, it was reportedly unclear how the total of almost 10 percent of Aareal shares attributed to Petrus are distributed among the Petrus partners and former Goldman Sachs managers Klaus Umek and Till Hufnagel and the company Petrus Advisers Investment Fund.
Aareal Bank had warned Petrus that incorrect notifications of voting rights could result in the “request for amendments” placed on the agenda by Petrus against the will of the Management Board and the Supervisory Board to deselect three members of the Supervisory Board. As a result, according to reports, the Petrus people corrected their voting rights notifications and brought them into a consistent form, so that nothing seems to stand in the way of a vote at the general meeting on May 18th. The only thing is that there will probably not be a new CEO by then.