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 Cryan faces one of the most difficult jobs in global finance as he
aims to move Deutsche Bank beyond the raft of regulatory and legal
probes that have bedeviled the bank under its current management and
execute a strategic overhaul.
Cryan takes over from Anshu Jain and Juergen Fitschen, Deutsche's
co-chief executives, who announced their resignations on Sunday,
just over a month after unveiling a cost-cutting drive designed to
arrest the bank's sub-par performance.
Investor scepticism with the turnaround plan due to a lack of detail
and a poor record on meeting targets together with staff disquiet at
the prospect of thousands of job cuts heaped pressure on the duo.
At the bank's annual shareholder meeting two weeks ago, 39 percent
of the capital represented voted against the management board and
some investors called for Jain and Fitschen to go.
Deutsche Bank has pledged to give more detail on its strategic
revamp at the end of next month and some investors were hopeful that
Cryan, who helped steer Swiss bank UBS through the financial crisis,
would be able to take more radical action than Jain, a former
investment banker who wanted Deutsche Bank to be Europe's answer to
Goldman Sachs.
"We believe Mr Cryan will be able to review the size and scale of
the investment bank with a much harsher lens than Mr Jain," said
Stuart Graham, analyst at Autonomous.
"The execution risk is higher than normal at Deutsche, but so too is
the investor unhappiness. We therefore expect the
shares to out-perform, at least for the next few months, on the back
of this cathartic management change."
Europe's banking elite has been roiled by the financial crisis and
its aftermath as new regulations and a slew of scandals eat into
profits.
Standard Chartered and Credit Suisse both have new chief executives
taking over this summer but of those trio, Cryan faces the most
formidable challenge.
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After sticking with an expensive universal banking model during the
crisis, Deutsche Bank is now playing catch-up with rivals in axing
unprofitable business lines to boost earnings and shore up its
balance sheet.
Deutsche’s “Strategy 2020” involves shrinking parts of its
investment bank and selling off its Postbank retail unit. Jain and
Fitschen had originally favored a more radical plan to get rid of
Deutsche’s entire retail business and become a pure investment bank
and wealth manager but they dropped it due to regulatory hurdles and
opposition from Berlin, supervisor concerns and one trade union.
The restructuring plan unveiled in April is meant to boost cost
savings by an annual 3.5 billion euros by 2020 and drive a return on
tangible equity, a key measure of profitability, of at least 10
percent in the same period.
But the strategy was the less radical of two options considered by
Deutsche's board and investors viewed it as unambitious. Previously,
the bank had targeted a return on equity of 12 percent for 2015.
Jain will step down at the end of this month while Fitschen will
leave after Deutsche Bank's annual shareholder meeting in May
meaning Cryan, a former chief financial officer at UBS, will be the
sole CEO.
(Writing by Carmel Crimmins; Editing by Giles Elgood)
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