Deutsche Bank Chairman Paul Achleitner has held talks with potential successors to Chief Executive John Cryan as part of plans to replace the executive should a better candidate emerge, according to people with knowledge of the matter.
Discussions have focused on a leader who speaks German and who works well with regulators, the people said, asking not to be identified. Achleitner has sounded out potential replacements as part of normal succession planning, they said. One top shareholder — asking not to be identified discussing sensitive matters — said Cryan remains the best choice as CEO of the bank.
Cryan has struggled to maintain investor backing after failing to return the lender to “controlled growth” as part of the bank’s third strategy revamp. A sustained slide at the investment bank has contributed to hundreds of job cuts as the bank seeks to curb costs and improve returns. The shares have declined about 29% this year, the second-worst performer in the 43-member Bloomberg Europe 500 Banks and Financial Services Index.
“Deutsche Bank’s restructuring isn’t going as some had hoped, and that’s bound to raise questions about management,” Daniel Regli, an analyst at MainFirst in Zurich who has an underperform recommendation on Deutsche Bank shares, said by phone on Tuesday. “I don’t think Cryan is the problem. It goes deeper.”
While much of the focus of shareholder discontent has focused on Cryan, one top shareholder criticized Achleitner for the perceived failure to find a replacement for Cryan more quickly. Other analysts and investors — pointing to the turmoil at the bank during the chairman’s tenure — also said that the chairman bears responsibility for the bank’s travails.
“I think the main problem at Deutsche Bank is Mr. Paul Achleitner,” Stefan Mueller, CEO of DGWA, the German Institute for Asset and Equity Allocation and Valuation, said on Bloomberg Television on Tuesday. “He implemented all these CEOs in the last years to make it happen that Deutsche Bank, formerly one of the best banks in the world, is still somehow distressed.”
Dieter Hein, an analyst at Fairesearch who has a sell recommendation on the bank’s stock, said Achleitner ‘isn’t part of the solution — he’s part of the problem.”
The Times of London reported that the lender is considering removing the CEO amid heightened tensions between him and Achleitner, without saying where it got the information. It has approached Richard Gnodde, head of Goldman Sachs Group's international operations, but he’s thought to have spurned the overture, it said. Deutsche Bank also considered UniCredit SpA CEO Jean Pierre Mustier and Standard Chartered Plc CEO Bill Winters, the report said.
Deutsche Bank spokeswoman Monika Schaller declined to comment on the Times’ report. The newspaper said Goldman Sachs also declined to comment.
“The fact that the bank isn’t responding to these media reports seems to indicate that the bank is willing to sacrifice Cryan,” said Markus Riesselmann, an analyst with Independent Research who has a sell recommendation on the stock.
Achleitner and Cryan have reportedly clashed on areas including the bank’s strategy and its relations with HNA Group, one of the bank’s largest shareholders.
Finding the right kind of replacement for Cryan may prove tricky. At least two top shareholders don’t think that the two deputy CEOs — retail co-head Christian Sewing and investment bank co-head Marcus Schenck — are CEO material just yet. Schenck is partly responsible for the investment bank’s performance, and Sewing doesn’t have the necessary investment banking expertise, according to people briefed on the investors’s thinking.
The bank’s share price has more than halved during Cryan’s tenure as CEO, and he has yet to deliver on his promise to regain market share in investment banking, made after the bank raised 8 billion euros in capital about a year ago.
Finding a suitable external candidate is proving difficult as the bank’s requirements limit the potential pool. Bringing in a new CEO would also entail turmoil at the top and sap management resources amid a big turnaround project, two other people said.
“I think Cryan’s done a tremendous job in very trying circumstances and a CEO change now would just delay the implementation of the strategy,” Neil Smith, an analyst at Bankhaus Lampe who recommends investors buy Deutsche Bank shares, said by phone from Dusseldorf on Tuesday. “You can’t expect results immediately. Deutsche Bank is in a turnaround situation.”
