Germany's largest lender Deutsche Bank has appointed Briton John Cryan as chief executive to replace Anshu Jain just two weeks after Jain was given more power to reorganise the bank. The bank has been struggling to restore its image tarnished by a raft of regulatory and legal problems which include probes into alleged manipulation of benchmark interest rates, mis-selling of derivatives, tax evasion and money laundering.
The German lender made a radical management shake-up 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 rival bank 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. The new CEO, who starts on July 1, was involved in the bank's new strategy blueprint and is unlikely to make significant changes to it, a senior bank source said.
The strategic plan has been 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."
Analysts at investment bank Jeffries praised Cryan's track record at UBS for "underpromising to over-deliver," saying he would be more likely to reverse Deutsche's ill fortunes without raising new capital or changing strategy yet again.
Jain decided that whoever was going to see through the strategy at Deutsche Bank needed to commit to a full five years and he was not able to do this, a source familiar with the situation said. He first discussed this with co-CEO Fitschen and the pair then agreed that they would both offer their resignation to Achleitner. Achleitner then let the supervisory board know of their decision, the source added.
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 per cent 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".
Making Jain directly responsible for cutting Deutsche Bank's costs by 4.7 billion euros ($5.2 billion), selling its Postbank retail business and paring back its investment bank put huge pressure on the executive.
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 side," Jain told them, according to one person present at the gathering.
“He was really upset, I mean, really upset.”
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.
