Deutsche Bank faces challenges after overhaul
9 Jun 2015 12:57 AM GMT
The shock resignation of Deutsche Bank’s two chief executives may offer Germany’s biggest lender a fresh start but will not be a cure-all for its ills, observers said on Monday.
Investors hailed the announcement that Deutsche Bank’s co-chief executives, Anshu Jain and Juergen Fitschen, are stepping down as the European financial giant faces a wave of scandals and has failed to meet profit targets this year. Deutsche Bank shares shot up nearly six percent higher on the Frankfurt stock exchange on the news in a generally weaker market.
Jain, 52, will quit at the end of June, while Fitschen, 66, plans to stay on in the job until after the group’s annual shareholder meeting in May 2016. Supervisory board member Britain’s John Cryan, 54, will initially take over from Jain in July as co-CEO and will then become sole chief executive after Fitschen steps down.
“Just like politicians, top executives’ only capital is trust,” the conservative daily Die Welt wrote. Jain’s and Fitschen’s “aura of integrity has been lost.” “The reputation of a bank that is so important for the German economy has reached rock bottom,” said the daily Frankfurter Allgemeine Zeitung. Gerhard Schick, <g data-gr-id="28">financial</g> expert for the environmentalist Green party <g data-gr-id="30">said</g> “there is at last a chance for the bank to make a fresh start.”
The two CEOs have been in their current positions since 2012 and their contracts had been due to run through March 2017. But at Deutsche Bank’s annual meeting last month the two faced shareholder wrath over the string of scandals and poor profitability. The group is mired in around 6,000 different litigation cases and was last month fined a record USD 2.5 billion (2.2 billion euros) for its involvement in an interest <g data-gr-id="31">rate-rigging</g> scandal.
It has also failed to meet its profit targets for this year so far. Despite substantial efforts to cut costs and diversify, Deutsche Bank -- which employs a workforce of more than 98,000 and has annual revenues of some 32 billion euros -- continues to lag behind its Anglo-Saxon rivals.
Shares soar over leadership change
Shares in Deutsche Bank soared on Monday, a day after the company said its co-CEOs, Anshu Jain and Juergen Fitschen, will step down early.
The bank’s shares were up 5.7 <g data-gr-id="56">per cent</g> in midday trading in Frankfurt at 29.20 euros by far the biggest gainer on the DAX index of leading German shares, which was off 0.6 <g data-gr-id="57">per cent</g>.
The rise follows Sunday’s statement from Germany’s biggest bank that Jain, 52, will depart at the end of this month while Fitschen, 66, will follow next May. Their successor will be British banker John Cryan, initially as co-CEO with Fitschen and then in sole charge. Cryan, 54, is currently a member of the company’s supervisory board.
Cryan was president for Europe at the Singaporean investment company Temasek from 2012 until last year. He was previously chief financial officer of the Swiss bank UBS AG. Jain and Fitschen became joint chief executives in 2012, succeeding Josef <g data-gr-id="61">Ackermann,</g> and had contracts running through March 2017.
Jain and Fitschen have sought to move the bank past lawsuits and legal issues that in some cases dated back years and stressed the need for the bank to change its culture.
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