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

Fri Sep 11, 2015 4:44am 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 at a weekend supervisory board retreat, rather an acceleration of existing plans to shed assets and exit countries.

The group’s 19-member top oversight body began a three-day meeting late on Thursday set to be held at the luxury Alpine resort near the Tegernsee lake south of Munich, a favorite location for Germany’s corporate elite.

Cryan’s ability to reform is constrained by factors that include costly litigation and fallout from turmoil in Asian markets. Also, his job is made more difficult because Deutsche is the last big investment bank to try to slim down, embarking on its restructuring long after rivals such as UBS UBSG.VX, Barclays (BARC.L: Quote) and Credit Suisse CSGN.VX.

Cryan will speed up the "salami slicing” approach of making incremental changes to strategy and cutting the balance sheet in a way that avoids hefty one-off charges, discussions held by Reuters with several people ahead of the weekend retreat revealed.

A big annual loss could result if the bank attempted, for example, to sell many of the long-dated derivative positions like interest rate swaps 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.

“He can’t re-invent the bank but he’ll optimize the bank,” said a former, long-time colleague of Cryan's. “He wouldn’t be where he is today if he was a pussycat.”   Continued...

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