Co-CEOs of Deutsche Bank resign
Shareholder pressure leads to surprise shakeup
FRANK FURT, GERMANY • Bowing to increasing shareholder pressure, Deutsche Bank said Sunday that its cochief executives, Anshu Jain and Jurgen Fitschen, had resigned and would be replaced by John Cryan, the former chief financial officer of the Swiss bank UBS.
Some large shareholders had called for Jain and Fitschen to step down because of a series of large legal penalties imposed on the bank for past wrongdoing, as well as inconsistent profit and questions about the bank’s strategy.
The resignation of Jain, 52, will take effect at the end of June. Fitschen, 66, will stay on for another year to ensure a smooth transition, according to Deutsche Bank.
Although some shareholders had been clamouring for a change in management, Jain’s resignation still comes as a surprise. Less than three weeks ago, Deutsche Bank’s supervisory board granted him more power, giving him direct responsibility for a reorganization plan intended to simplify the bank, save 3.5 billion euros (US$3.9 billion) annually and produce a profit equal to at least 10 per cent of the capital invested.
A person with knowledge of the situation said that, although he had been under pressure from shareholders, Jain was leaving of his own volition. He will not collect a 15 million euro severance payment he would have received if he had been fired, the person said.
Jain, who was born in India and earned an MBA at the University of Massachusetts, has worked at Deutsche Bank for 20 years and played a major role in establishing the bank as a force on Wall Street and a credible rival to U.S. investment banks like Goldman Sachs and JP Morgan Chase.
But since becoming co-chief executive in 2012, Jain had faced questions about whether someone so closely identified with the investment banking unit was the right person to deal with serious accusations of wrongdoing. The misconduct at Deutsche Bank has almost always stemmed from activities at the investment banking unit.
In April, Deutsche Bank agreed to pay US$2.5 billion to the United States and British authorities to settle accusations that some employees had conspired to rig benchmark interest rates. While Jain was not accused of taking part in the conspiracy, some shareholders said he handled the investigation and settlement badly.
The fine was more than other banks paid in the same case, reflecting what the authorities said was foot-dragging by Deutsche Bank in providing information to investigators.
“Deutsche Bank has critical operational issues and management issues,” said Janet Tavakoli, president of Tavakoli Structured Finance Inc., a consulting firm in Chicago. “One cannot effectively manage risk — or measure the current situation — when internal paperwork and records are not in order.”