Deutsche Bank shares jump after management purge

FRANKFURT - Reuters

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The appointment of John Cryan as chief executive of Deutsche Bank sent shares in Germany’s largest lender up 8 percent on June 8 as investors judged the Briton a more credible contender than his two ousted predecessors to revive its fortunes. 

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 June 7, just over a month after unveiling a cost-cutting drive designed to arrest the bank’s sub-par performance. 

Investor skepticism 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.