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Bruised Deutsche Bank investors demand rapid results from Cryan

Reuters 

By and Andreas Framke

- Bank's warning last week of a third year of losses has prompted some investors to question whether John should be given more time to turn around the bank, after less than three years as

After the initial shock of Friday's announcement by that it would post a third consecutive annual loss in 2017, some shareholders are now airing their impatience.

Several top 20 shareholders contacted by say that 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

And support for Cryan, who became in 2015 and was charged with turning the struggling around, is waning among some investors who are concerned by the slow progress made.

The 57-year-old British former had raised their hopes last July when he said that he expected to finally return to profit in 2017.

"The pressure on John will now increase," one major shareholder told Reuters, speaking on condition of anonymity.

Some investors are publicly calling for to consider replacing as following the forecast.

"It should be considered," Michael Huenseler, head of at Assenagon, which owns shares, said. "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, 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 newspaper.

Asked whether he wanted to extend his contract when it comes up for renewal in 2020, said:

"I'm doing well. I am healthy, and I hope for the useful.

But my contract runs another 2.5 years. The question about how it goes after that hasn't been posed."

declined to comment on Cryan's future or the investor calls for a change in strategy.

HARD SLOG IN STORE

Germany's biggest announced an overhaul in March last year that included integrating its retail with its in-house consumer in an effort to cut costs, as well as the partial sale of its asset management business.

However, and his deputies have cautioned that the turnaround would be a long, hard slot.

Despite the latest setback, others among Bank's largest investors are giving time, but prescribing fixes.

"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 Bank's shares.

"The problem appears limited to the U. S. investment bank," said the person, speaking on condition of anonymity.

"must take care of this quickly and, for example, find a strong personality who can take over the trading business there to revive it."

Other investors said they were closely watching the earnings of U. S. competitors to see whether the was closing the gap.

said last week that revenue at its cash-generating bond-trading division was expected to drop 22 percent in the fourth quarter from a year ago.

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.

"We are keen to see how other investment have performed, but we suspect (weak performance) is something more specific," Assenagon's Huenseler said.

Ratings agency Standard & Poor's, which likens 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 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."

Despite the bad for investors, the prospects for some staff are looking better after promised to pay them bonuses in 2017, after virtually abolishing them for 2016.

(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.)

First Published: Wed, January 10 2018. 12:14 IST
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