FRANKFURT: Deutsche Bank boosted the power of Co-Chief Executive Anshu Jain in a management shakeup, but shareholders criticised the moves as insufficient and demanded more changes to restore confidence in the leadership of Germany’s largest bank.
The bank ousted some executives and re-arranged responsibilities among its top brass on the eve of its annual shareholder meeting, putting Jain in charge of a reorganisation and cost-cutting despite criticism of his performance.
The Indian-born former trader faces a symbolic vote of confidence at the annual meeting, along with the other management board members. But regardless of whether he wins or loses the non-binding vote, he is on borrowed time to prove he can boost Deutsche’s earnings after failing to meet previous targets.
“Jain now has 12 to 18 months to deliver,” said one top-20 shareholder.
Deutsche Bank has trailed rivals under the leadership of Jain and its other Co-Chief Executive, Juergen Fitschen. Despite fallout from the financial crisis, they stuck to a costly universal banking model offering everything from mortgages in Germany to derivatives in London.
A restructuring plan unveiled last month to axe unprofitable business lines was judged too little, too late by some investors and to mollify them, the bank’s supervisory board chairman Paul Achleitner moved late on Wednesday to revamp the management board. This put Jain in charge of reducing the bank’s costs by €4.7bn, selling its Postbank retail business and paring back its investment bank. Now it is clear who is in charge but also who is responsible if things don’t go to plan.
A mover and shaker in financial capitals and an engaging speaker in private, Jain’s inability to speak German means he often appears awkward at shareholder events, dominated by small- and sometimes vociferous investors.
He gave a long speech in English yesterday but to meet German law, which requires that shareholder meetings are conducted fully in German, Jain’s microphone was cut off to run a German voice-over, causing laughter from some audience members. Jain landed the top spot at Deutsche in 2012 after the investment banking division he ran consistently delivered up to 85 percent of group profit and frequently outperformed peers.
But tougher regulatory requirements and litigation, including a $2.5bn fine to settle allegations that Deutsche traders rigged benchmark interest rates, have taken the shine off a division often referred to internally as “Anshu’s army”.
Shareholder adviser Hermes Equity Ownership Services said on Thursday that Achleitner’s rejig, unveiled during a supervisory board meeting on the 34th floor of Deutsche’s Frankfurt headquarters on Wednesday night, had not gone far enough.
Reuters
