Bawag Group AG slumped the most in three years after activist investor Petrus Advisers disclosed a short position in the Austrian lender and raised questions about its deposit base, US real estate exposure and loans to management.

Bawag’s franchise is “degrading” and the lender has lost retail deposit market share, pushing up the ratio of loans to deposits, the investor said in a presentation. Petrus, which was previously a shareholder in the Austrian lender, said it had recently taken a short position, betting that the stock will decline.

Bawag didn’t respond to several requests for comment. Shares of the lender dropped as much as 14% before paring declines. The stock hit a record high in late February and then slumped in the wake of the regional banking turmoil in the US.

Petrus argued that the lender is replacing deposits with wholesale funding, and is acting more like a credit hedge fund by increasing its commercial real estate loans in the US and buying structured credit portfolios. The firm also criticized pay for Chief Executive Officer Anas Abuzaakouk as too high, and questioned loans to management that Petrus said had reached €36 million.

Bawag “has erased all revenue generating business units and relies almost exclusively on brokers and third-party vendors for the structure and growth of its balance sheet,” Petrus said. “We think Bawag needs an intervention from the regulator and should not be allowed to distribute capital until the franchise has stabilized with necessary leadership changes.”

Bawag has returned more than €1 billion through dividends in the past four years and repurchased more than €700 million in shares. Revenue has increased 14% in the period, though net income and pretax profit declined.

The Austrian lender said in April as part of its first-quarter earnings presentation that its “goal is, and will always be, maintaining a strong balance sheet, solid capitalization levels, low balance sheet leverage and conservative underwriting.”

Petrus has become a frequent activist investor among smaller banks in Germany. It made a substantial profit from its investment in Comdirect when it was fully taken over by Commerzbank AG, and from selling its stake in Aareal when it was bought by Advent and Centerbridge last year. The firm is also currently engaged in a campaign against Deutsche Pfandbriefbank AG.

Bawag was floated on the Vienna stock exchange almost six years ago at a price of 48 euros per share in what was Austria’s biggest initial public offering ever at the time. The IPO capped more than a decade of restructuring after Cerberus Capital Management bought the bank in 2006.

(Adds details on dividends in sixth paragraph.)