Deutsche Bank has purged its leadership, appointing Britain's John Cryan as CEO to replace Anshu Jain and Juergen Fitschen within the coming year. The move comes amid scandal at Germany's largest lender.
Deutsche Bank has struggled to restore an image tarnished by a raft of regulatory and legal problems which include probes into alleged manipulation of benchmark interest rates, of derivatives, tax evasion and money laundering.
The German lender presented a radical management shakeup on May 21 in a last ditch attempt to restore confidence in its management, but some investors demanded more changes.
Cryan, 54, has been on the bank's supervisory board since 2013 and was a former chief financial officer of UBS. He will replace co-CEO Jain, who will resign on June 30, and become the sole CEO when the other co-CEO, Juergen Fitschen, steps down next year, the bank said.
Cryan said there was work to be done. "Our future will be defined by how well we deliver on strategy, impress clients and reduce complexity," he said in a Deutsche Bank statement announcing his appointment.
The new CEO, who starts on July 1, was heavily involved in the bank's new strategy blueprint and is unlikely to make significant changes to it, a senior bank source told Reuters.
"The strategy will not be reformulated but there's obviously room to shape the details of the strategy," the source said.
The strategic plan has been roundly criticized by investors as too little too late.
"A lot of detail is still needed on it," said Chris Wheeler, bank analyst at Atlantic Equities in London. "Does the new person say they want to review it or say it's fine ... It's a massive job still to do. It's one of the world's biggest investment banks and Germany's national champion."
Another analyst, who declined to be named, said Cryan had helped maneuver UBS out of crisis. "Cryan is a humble person ... and he likes understatement unlike the masters of the universe generation."
Supervisory board chairman Paul Achleitner said the decision by Jain and Fitschen to step down demonstrated their commitment to putting the bank's interests ahead of their own, praising their contributions.
Jain, an Indian-born British citizen, landed the top spot at Deutsche in 2012 after the investment banking division he ran consistently delivered up to 85 percent of group profit and frequently outperformed peers.
But tougher regulatory requirements and litigation, including a $2.5 billion fine to settle allegations that Deutsche traders rigged benchmark interest rates, took the shine off a division often referred to internally as "Anshu's army."
After criticism from shareholders at last month's AGM, Jain addressed a gathering of senior staff and coordinators, offering an early hint that he was prepared to leave. "I don't want to stand in the way of the development of the bank and if necessary I will step aside," Jain told them, according to one person present at the gathering.
Lingering legal fallout
Fitschen was hired as co-CEO to maintain the bank's German profile but his ability to sell the group's strategy to domestic shareholders has been impaired by his own legal problems.
He is required to appear nearly every week at a criminal court in Munich to defend himself against allegations that he misled investigators in a dispute with the heirs of the Kirch media empire.
Huw van Steenis, analyst at Morgan Stanley in London, said legacy issues, leverage and German retail would drag on the bank. "With unions seeking a 5 percent wage increase and job security, it's not obvious DB has easy levers to pull fast," he said.
"Costs on the other hand have been stubbornly high, despite DB (having) multiple plans to cut costs which have failed to deliver."
The shakeup is the latest of a string of similar moves among European banks. Barclays, Credit Suisse and UBS have all gained new leaders since the financial crisis hit.
A fresh opportunity
Gerhard Schick, the spokesman for financial matters for Germany's Green party said it finally gave Deutsche Bank a chance for a fresh start.
"The current bosses were tied too closely to the problems for them to represent a change of corporate culture. This new start should have been done when (former CEO) Josef Ackermann left," he said.
"The decisions back then have led to a couple of lost years for the bank. The new management needs to clean up, particularly in investment banking."
glb/rc (Reuters, AP, AFP, dpa)