By Tom Sims and Andreas Framke
REUTERS - Deutsche Bank's warning last week of a third year of losses has prompted some investors to question whether John Cryan should be given more time to turn around the bank, after less than three years as chief executive.
Several top 20 shareholders contacted by Reuters say that Deutsche Bank must swiftly close the gap with its U. S. rivals by winning back market share and improving the performance of its investment bank, especially in the United States.
"The pressure on John Cryan will now increase," one major shareholder told Reuters, speaking on condition of anonymity.
"It should be considered," Michael Huenseler, head of credit portfolio management at Assenagon, which owns Deutsche Bank shares, said. "Cryan earns a lot of credit, but going forward, I feel it is time for a discussion of a change of strategy at the top and that comes with a different management."
During his tenure, Cryan has stabilized the bank, raised capital, designed an overhaul, cut costs, confronted daunting legal challenges, and managed the demands of greater regulation.
However, the bank's shares are now trading 37 percent lower than the day he took over. The stock has lost 7.5 percent since Friday's profit warning, with the shares hitting their lowest level in nearly two months.
Cryan, who consultancy HKP said earned 3.84 million euros ($4.6 million) in 2016, gave his most recent view on his tenure in a December interview with Boersen-Zeitung newspaper.
Asked whether he wanted to extend his contract when it comes up for renewal in 2020, Cryan said:
"I'm doing well. I am healthy, and I hope for the bank useful.
But my contract runs another 2.5 years. The question about how it goes after that hasn't been posed."
HARD SLOG IN STORE
Germany's biggest bank announced an overhaul in March last year that included integrating its Postbank retail bank with its in-house consumer bank in an effort to cut costs, as well as the partial sale of its asset management business.
However, Cryan and his deputies have cautioned that the turnaround would be a long, hard slot.
"Cryan's strategy as such isn't in doubt - not yet," said a person familiar with the thinking of the royal family of Qatar, which owns just under 10 percent of Deutsche Bank's shares.
"The problem appears limited to the U. S. investment bank," said the person, speaking on condition of anonymity.
Other investors said they were closely watching the earnings of U. S. competitors to see whether the bank was closing the gap.
JPMorgan JPM. N, the first major Wall Street firm due to report earnings, is due to do so on Friday, with analysts predicting a 15 percent slide in trading revenue at competitors.
Ratings agency Standard & Poor's, which likens Deutsche Bank' difficulty to turn around quickly to a supertanker, rates it at the bottom of its peers, with a negative outlook.
A November report by S&P said the bank was focused on an "extended and far-reaching restructuring program; by contrast, many competitors are more focused on business as usual."
S&P said it would trim the bank's rating by a notch if it "remains a relative underperformer in its core businesses."
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)