Deutsche Bank CEO 'losing support of top stakeholders'

Mr John Cryan has not delivered on his March pledge to resurrect growth at Europe's largest investment bank.
Mr John Cryan has not delivered on his March pledge to resurrect growth at Europe's largest investment bank.

FRANKFURT • Chief executive John Cryan is losing the support of some investors just seven months into Deutsche Bank's latest turnaround plan.

Three of the 10 largest stakeholders in the bank, speaking on condition of anonymity, said they want to see a turnaround in the next few quarters, particularly in the trading business, to continue to back the 56-year-old Briton. Two even said that should Mr Cryan not be able to deliver by the annual shareholder meeting in May, an external candidate may be the best option to replace him.

Mr Cryan has not delivered on his March pledge to resurrect growth at Europe's largest investment bank as early as this year - revenue declined in all but two quarters since he took over in 2015 and has been falling in recent months.

But he has pleased some investors by settling legacy misconduct cases, reducing risk in the securities unit and raising fresh capital.

"Pressure will mount on the management board if we don't see improvement in the next two quarters," said Mr Ingo Speich, a fund manager with Union Investment, which owns about 0.15 per cent in Deutsche Bank and is not a top-10 stakeholder.

A spokesman for Deutsche Bank declined to comment.

The investment bank's shares have lost almost 8 per cent since Mr Cryan raised €8 billion (S$12.8 billion) from investors in April, in a capital increase underwritten at €11.65 a share. That is the fourth-worst performance in the 44-member Bloomberg Europe 500 Banks and Financial Services Index. The stock fell 0.5 per cent to €14.31 at 10.50am in Frankfurt yesterday.

The shareholders in private expressed dissatisfaction with that performance.

When Mr Cryan unveiled his latest turnaround plan in March, a strategy focused on cutting costs and integrating its Postbank consumer banking unit, he said he wanted to return the bank to a path of "modest growth".

After reducing risk in the bank, he had planned to regain market share in the parts of fixed-income trading he is holding on to.

But a challenging market and low morale following deep bonus cuts and two years of tumult at the bank have put that goal out of reach for now. Second-quarter revenue from fixed-income trading dropped 12 per cent year on year.

Equity trading decreased even more, slumping 28 per cent, as the bank lost market share.

The chief executive has guided that the next set of results, due on Oct 26, will not see a huge improvement.

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A version of this article appeared in the print edition of The Straits Times on October 11, 2017, with the headline 'Deutsche Bank CEO 'losing support of top stakeholders''. Print Edition | Subscribe