By Eyk Henning
FRANKFURT--Deutsche Bank AG's incoming co-Chief Executive John
Cryan on Wednesday postponed a detailed presentation of the giant
German lender's new strategy until the end of October, but said he
remains committed to trimming its operations.
In a letter to staff posted on the bank's website, he said: "I
am not going to tell you that all will be sweetness and light in
the coming months," setting the stage for potentially deep staff
cuts and an increased focus on changing the business's corporate
culture.
The former UBS finance chief starts Wednesday as co-CEO
alongside Jürgen Fitschen. He replaces Anshu Jain who stepped down
last month amid criticism from regulators and investors. Mr. Jain's
departure was first reported by The Wall Street Journal.
Mr. Cryan on Wednesday stressed his commitment to the
cornerstone of a new strategy announced by the bank in April, which
included plans to shed its Postbank AG retail banking business, but
said he would take the summer and fall to work out how to cut costs
and other details of the plan.
The plan aimed to streamline the at-times unwieldy German lender
and to boost its profitability, but stopped short of a radical plan
to break up its investment banking and retail operations into
separate companies.
Investors were keenly awaiting Mr. Cryan's take on the bank's
new strategy that some complained lacked detail when it was first
announced. His presentation had been slated to happen by the end of
this month.
Deutsche Bank has trailed rivals in terms of profitability and
share price since Mr. Jain and Mr. Fitschen took the helm in
mid-2012, as they grappled with a series of costly lawsuits and
attempted to lower costs.
Addressing staff on his first day on the job, Mr. Cryan conceded
that the reputation of Germany's largest lender has been "damaged
by instances of serious misconduct." The resulting heavy fines for
settling lawsuits "have strained our capital...and will likely
continue to do so for some time," he said.
Revamping the bank's corporate culture was deemed necessary
after Deutsche Bank shelled out around EUR9 billion ($10.04
billion) over the past three years to settle lawsuits and
regulatory investigations, most of which stem from the investment
bank Mr. Jain once ran. Deutsche Bank paid a record $2.5 billion
fine to settle U.K. and U.S. investigations into the manipulation
of the London interbank offered rates, or Libor.
One of Mr. Cryan's main tasks will be to mitigate the bank's
contentious relations with regulators. A person familiar with
conversations between Deutsche Bank and the German banking
regulator, BaFin, said the agency has been critical of Mr. Jain,
pointing to a recent confidential report on attempts by Deutsche
Bank traders to manipulate Libor. Although the report said no
executives were involved in the scandal, BaFin noted that Mr. Jain
was head of the investment bank and therefore "ultimately
responsible for the missteps in the eyes of BaFin," the Journal
reported previously.
Deutsche Bank officials have said repeatedly that there was no
pressure from regulators on Mr. Jain to step down. BaFin's top
supervisor, Felix Hufeld, on Monday declined to say if the watchdog
pressured Mr. Jain to leave. Asked how BaFin encourages a
management change in general, Mr. Hufeld said it "informally
communicates [that to a bank]. And then we wait and see what
happens."
He also said BaFin wished Mr. Cryan well, adding that Deutsche
Bank has to improve its internal processes and culture.
Also high on Mr. Cryan's priority list now is making deep cost
cuts to close the bank's profitability gap with rivals. Mr. Cryan,
54, is expected to accelerate EUR3.5 billion ($3.9 billion) in
announced cost cuts the bank had said it wanted to achieve by
2020.
Hans Bentzien
contributed to this article.
Write to Eyk Henning at eyk.henning@wsj.com and Sarah Sloat at
sarah.sloat@wsj.com
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