Jain of command

Deutsche's cosmetic rejig puts pressure on Jain

Deutsche Bank's management reshuffle ratchets up the pressure on co-Chief Executive Anshu Jain. The changes announced on May 20 are largely cosmetic, and will do little to stop investors registering displeasure at Deutsche's top brass after the bank's annual meeting late on Thursday. But Jain's new sole responsibility for strategy makes him directly accountable for much-needed cost cuts.

After three years of chronic underperformance, both co-chief executives are fortunate to have retained their jobs. Since they took over on June 1, 2012, Jain and his co-Chief Juergen Fitschen have presided over a 6.6 per cent rise in Deutsche's share price. In that time, the Eurostoxx bank benchmark index has doubled. Deutsche's stock is actually down 6.5 per cent since the duo unveiled their failed "2015+" strategy in September 2012, and 2014 return on equity was 2.7 per cent.

The extent of that underperformance is most clearly seen in Deutsche's inability to reduce costs. Expenses were supposed to be around 65 per cent of revenue by the end of this year. Instead, analysts peg them at 84 per cent for 2015. Last year they were 87 per cent, not much better than the 93 per cent recorded in 2012.

Small wonder that shareholder advisers ISS and Hermes EOS have recommended that investors express no-confidence in the bank's management at the AGM. While German shareholder votes are non-binding, Hermes has even called for fresh faces at the top of the bank. Only Rainer Neske is leaving Deutsche's eight-strong management board - though that's hardly a surprise given the retail banking division he ran is the business being hacked back most.

Deutsche kremlinologists may wonder whether the most recent changes are a prelude to a wider revamp by Chairman Paul Achleitner. Former Finance Director Stefan Krause now has responsibility for transactional banking, Deutsche's best-performing business and its most promising prospect for growing returns. Success there could potentially put him in line for elevation.

There are small signs here that Deutsche is getting to grips with the need for accountability, and Jain could seize his opportunity to deliver change. But investors could be forgiven for considering it too little, too late.