Investors Say New CEO Brings Fresh Eyes to Deutsche Bank

Deutsche Bank Executives to Step DownOn Sunday, June 7, 2015, the supervisory board of Deutsche Bank AG (NYSE/DB) announced its decision to appoint John Cryan to the position of Co-Chief Executive Officer, effective July 1, 2015. (Source: Deutsche Bank, last accessed June 8, 2015.)

Cryan will succeed Jürgen Fitschen and Anshu Jain. Cryan, the newly appointed Co-CEO, has been a member of Deutsche Bank’s Supervisory Board since 2013, and served as Chairman of the Audit Committee and a member of the Risk Committee.

Prior to joining Deutsche Bank, Cryan was President (Europe) at Temasek, the Singaporean investment company, from 2012 to 2014. Previously, he was Chief Financial Officer of UBS from 2008 to 2011 and worked in corporate finance and client advisory roles at UBS and SG Warburg since 1987. He is a graduate of the University of Cambridge.

Current Co-Chief Executive Officers, Fitschen and Jain, will step down from their roles. Jain will step down on June 30, 2015 while the Supervisory Board has asked Fitschen to remain in his current role until the conclusion of the Annual General Meeting on May 19, 2016, to help ensure a smooth transition. Upon Fitschen’s departure on May 19, 2016, Cryan will become the bank’s sole CEO.

Deutsche’s Financials

Deutsche Bank stuck to an expensive global banking model designed and planned under Jain and Fitschen. The bank is now in a tough spot, as it is playing catch-up with rivals such as UBS Group AG (NYSE/UBS), Barclays PLC (NYSE/BCS) and Credit Suisse Group AG (NYSE/CS); all of which have moved faster to restructure their strategies to achieve greater efficiency.

In fiscal 2014, Deutsche Bank announced net income of 1.7 billion euros (roughly $2.26 billion), versus net income of 681 million euros (roughly $904 million) in the prior year. Although the company’s net income increased in 2014, shareholders want Deutsche Bank to be more ambitious about slashing costs. (Source: Deutsche Bank, last accessed June 8, 2015.)

Deutsche’s 2020 Strategy

According to Deutsche’s “Strategy 2020,” the bank is aiming for a return of 10% on tangible equity. This compares to a previous target of 12% in 2015. To help it reach its target, Deutsche Bank plans to sell its Postbank units and shrink parts of its investment segment. The bank is also expected to continue to invest in efficiency and service quality.

The newly appointed Co-CEO is expected to stick to its “Strategy 2020” and focus on further execution and implementation of the plan.