FRANKFURT Deutsche Bank Chief Executive John Cryan will present details of a deep overhaul of Germany’s biggest lender on Thursday, hoping his changes will please investors after rival Credit Suisse’s plan drew a tepid response.
One top 30 institutional shareholder told Reuters that Deutsche Bank must present a “large and credible” cost saving plan, while sources familiar with the matter said last month that about 23,000 jobs, or a quarter of total staff, may be cut.
The Briton, who has kept a relatively low profile since taking charge in July, will hold a two-hour webcast on Oct. 29 to update investors on the bank’s ‘Strategy 2020’ program.
Cryan, 54, is seeking to address flagging profits and a litany of regulatory and legal problems that have cost billions of euros in fines and settlements in recent years.
He began laying the ground this month by announcing a broad reorganization of business lines and the departure of a raft of senior executives, including board members.
However, other major international banks such as UBS and U.S. players including JP Morgan made swifter changes to their strategies to address persistently low interest rates and tighter regulation after the financial crisis. Deutsche Bank and Credit Suisse are having to play catch up, analysts say.
Deutsche Bank has already said it will have a record 6 billion euro ($6.7 billion) pretax loss in the third quarter. That was driven by goodwill writedowns in its corporate and retail banking units, a writedown on its 20 percent stake in Chinese lender Hua Xia and an increase of 1.2 billion euros to provisions for litigation.
The initial moves have enhanced Cryan’s reputation for decisive action, while his pledge to curtail bonuses and the dividend was welcomed by investors as a sign that a capital increase was not his preferred option.
Deutsche Bank shares have risen nearly 6 percent since the management changes were announced on Oct. 18 and nearly 10 percent since it forecast the third-quarter loss on Oct. 7.
Credit Suisse’s shares failed to make headway this week after new CEO Tidjane Thiam announced strategy changes emphasizing growth in wealth management and Asia and cutbacks in investment banking, accompanied by plans to raise $6 billion from the sale of its shares.
Cryan will have to juggle lots of changes, which could be “potentially disruptive” for Deutsche Bank, credit rating agency Moody’s said on Thursday.
The bank may need to invest billions in its restructuring, money that will not then be available for growth, let alone takeovers, analysts said.
“Deutsche Bank’s earning will therefore remain under pressure in 2016 as well,” said Equinet analyst Philipp Haessler. ($1 = 0.8997 euros)
(Additional reporting by Kathrin Jones and Sinead Cruise– Editing by Keith Weir)
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