Deutsche Bank changes CEO to stop further loss
Co-deputy Christian Sewing replaced John Cryan at an emergency meeting
12 April, 2018
Deutsche Bank, Germany's biggest lender, dismissed its British-born chief executive John Cryan at an emergency meeting that ended late last Sunday night and appointed at his post co-deputy CEO Christian Sewing, who took over the bank with immediate effect, news wires reported. Deutsche Bank Chairman Paul Achleitner said after the meeting that Cryan had “laid the groundwork for a successful future of the bank despite his relatively short tenure as CEO.” He also praised Sewing who, in his words, had proved to be a “strong and disciplined leader” in his more than 25 years at Deutsche. “The supervisory board is convinced that he and his team will be able to successfully lead Deutsche Bank into a new era. We trust in the great ability of this bank and its many talents,” Achleitner pointed out.Cryan took over the bank in 2015 and since then had battled the fallout from a series of scandals as well as three years of reported losses. His contract was due to expire in 2020. Sewing, who has been with the bank for his entire career, had been responsible for its private and commercial bank operations. According to some analysts, his appointment suggests a strategic shift towards retail banking in its home market.Deutsche Bank has grappled with falling revenues, and its share price has sunk by close to a third this year. But its shares rose more than 3% in Frankfurt last Monday after the changes at the helm were announced. The search to replace Cryan had begun after the bank reported an annual loss of €500m at the end of February. That followed losses of €6.8bn in 2015 and €1.4bn in 2016. Cryan was appointed as co-CEO in July 2015, with the main aim to overhaul the bank following a number of regulatory problems stretching back to before the financial crisis.The banker was also tasked with controlling the lender's spiralling costs and quickly cut thousands of jobs. But after becoming sole CEO in 2016, Deutsche continued to struggle, largely because of a slump in its investment banking division, which accounts for more than half of sales. In resolving its legal difficulties, it also incurred a series of heavy penalties, including a $7.2bn payment to US authorities in 2016 over an investigation into mortgage-backed securities.At that time, it was considered to be the most dangerous bank in the world after the International Monetary Fund (IMF) found that a potential collapse of Deutsche posed the biggest risk to the stability of the global financial system. Also in June 2016, Deutsche's US division failed a stress test conducted by the US Federal Reserve. Deutsche and Santander's US unit were the only two of 33 banks to fail the test, which assessed how they would perform in a financial crisis.According to Markus Riesselmann, an analyst at Independent Research cited by the BBC, Cryan “had to battle serious problems that his predecessors swept under the rug for years.” “He has largely cleared those up and now it looks like Deutsche can't turn things around regarding margins, but I doubt a new CEO could successfully make that transition. It seems rather to be a fundamental Deutsche Bank problem,” he added.
Deutsche Bank's twin tower headquarters in Frankfurt am Main.