Deutsche Bank’s co-chiefs re­sign amid scan­dals

The China Post - - WORLD BUSINESS - BY BENOIT TOUS­SAINT

Euro­pean f i nan­cial gi­ant Deutsche Bank an­nounced Sun­day its co-chief ex­ec­u­tives are step­ping down as the bank­ing group faces a wave of scan­dals and has failed to meet profit tar­gets this year.

An­shu Jain will re­sign at the end of June, while Juer­gen Fitschen plans to stay on in the job un­til af­ter Deutsche Bank’s an­nual share­holder meet­ing in May 2016.

Deutsche Bank said it has ap­pointed su­per­vi­sory board mem­ber John Cryan, 54, to take over in July as co-CEO and he will be­come sole chief ex­ec­u­tive af­ter Fitschen steps down.

Ger­many’s largest lender is mired in around 6,000 dif­fer­ent lit­i­ga­tion cases and was last month fined a record US$2.5 bil­lion (2.2 bil­lion eu­ros) for its in­volve­ment in an in­ter­est rate-rig­ging scan­dal.

In mid- May, the bank con­firmed it had opened an in­ter­nal probe into its in­vest­ment di­vi­sion in Rus­sia, with the Ger­man press speak­ing of pos­si­ble money laun­der­ing.

Bloomberg re­ported the case in­volved some US$6 bil­lion in trans­ac­tions over four years.

The res­ig­na­tions were wel­comed by stock­hold­ers in Ger­many, who had blasted the lead­ers for their per­for­mance.

“The in­vestors had lost their trust in An­shu Jain and Juer­gen Fitschen,” said Klaus Nied­ing, vice pres­i­dent of the share­hold­ers’ as­so­ci­a­tion DSW.

The duo had taken the reins of the bank with the prom­ise of end­ing a string of scan­dals, im­prov­ing its im­age and mak­ing the in­sti­tu­tion more prof­itable.

But three years later the re­sults are still not where share­hold­ers want them to be and the bank’s legal trou­bles have not gone away.

Fitschen is on trial in Ger­many on al­le­ga­tions he gave mis­lead­ing tes­ti­mony in 2002 and faces pri­son.

“The promised change of cul­ture

never ar­rived,” Nied­ing said.

Ar­ro­gance and Bril­liance

Deutsche Bank’s state­ment did not say why Jain, 52, and Fitschen, 66, had re­signed, but com­mended the men for their choice.

“Their de­ci­sion to step down early demon­strates im­pres­sively their at­ti­tude of putting the bank’s in­ter­ests ahead of their own,” the state­ment said.

The two CEOs have been in their cur­rent po­si­tions since 2012 and their con­tracts were due to run through March 2017, Deutsche Bank said in a state­ment.

Cryan pre­vi­ously served as chief fi­nan­cial of­fi­cer for Swiss bank UBS from 2008-2011 and has been on Deutsche Bank’s ad­vi­sory board since 2013.

At Deutsche Bank’s an­nual meet­ing last month the two men faced share­holder wrath over the string of scan­dals and poor prof­itabil­ity. The bank has so far failed to meet its profit tar­gets for this year.

Deutsche Bank, which em­ploys a work­force of more than 98,000 and has an­nual rev­enues of some 32 bil­lion eu­ros, is torn be­tween its am­bi­tions in in­vest­ment bank­ing and its his­toric do­mes­tic re­tail bank­ing net­work.

De­spite sub­stan­tial ef­forts to cut costs and di­ver­sify, the bank con­tin­ues to lag be­hind its An­glo- Saxon ri­vals.

Net profit slumped to 559 mil­lion eu­ros (US$608 mil­lion) in the first quar­ter to end-March from 1.1 bil­lion eu­ros in the same pe­riod of 2014 be­cause of lit­i­ga­tion costs.

Jain was once a star at Deutsche Bank, hav­ing helped it nearly triple tax­able prof­its from 2003-2007. He took over as the co-chief of the in­vest­ment bank­ing di­vi­sion in 2004 and be­came its sole chief in 2010.

The fi­nan­cial cri­sis plunged the bank into the red in 2008, but a year later Jain man­aged to re­turn his di­vi­sion to pow­er­house sta­tus.

Though he was wel­comed when he took the top job, his rep­u­ta­tion quickly lost its lus­ter.

He was tar­nished by a string of scan­dals and fraud that oc­curred at the in­vest­ment di­vi­sion while he ran it and which con­tinue to cost the group money.

Jain was also known for his bril­liant anal­y­sis, con­ceiv­ing of fi­nan­cial prod­ucts and his ne­go­ti­at­ing prow­ess.

How­ever, his de­trac­tors saw him as be­ing pos­sessed of an ar­ro­gance that helped drive a wedge be­tween the in­vest­ment bank­ing op­er­a­tions in Lon­don and Deutsche Bank’s more tra­di­tional ac­tiv­i­ties in Ger­many.

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