Deutsche Bank CEO to shy away from 'big bang' reform at board summit

Thu Sep 10, 2015 2:16pm EDT
 
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By Thomas Atkins

FRANKFURT (Reuters) - John Cryan, Deutsche Bank’s (DBKGn.DE: Quote) new chief executive, will not present “big bang” reforms when the supervisory board gathers Thursday evening, rather an acceleration of existing plans to shed assets and exit countries.

The group’s 19-member supervisory board convened for a three-day retreat planned for the luxury Alpine resort near the Tegernsee lake south of Munich, a favorite location for Germany’s corporate executives.

Cryan’s ability to launch major reforms is limited by numerous factors, including the costly overhang of outstanding litigation, discussions held by Reuters with several people involved in the weekend retreat revealed.

He will continue the bank’s "salami slicing” tactic of making incremental changes and cuts to its balance sheet to avoid hefty one-off charges.

A big annual loss could result if the bank attempted, for example, to sell many of the long-dated derivative positions that use up a lot of the regulatory capital at its investment bank.

It could also alienate the very executives Cryan needs most to execute the new plan, because their bonus payments could be clawed back due to the loss.

But Cryan is keen to keep up the momentum for reform after a series of leaks hampered efforts led by his predecessor Anshu Jain and outgoing co-CEO Juergen Fitschen.

Deutsche, hit by a string of scandals and fines, is currently the lowest-ranking global investment bank when measured by its price to book ratio of around 0.5.   Continued...

 
A Deutsche Bank logo adorns a wall at the company's headquarters in Frankfurt, Germany June 9, 2015. REUTERS/Ralph Orlowski