Published by Financial Times – 9th April 2018
Deutsche Bank’s supervisory board has named Christian Sewing as the German lender’s new chief executive, ousting John Cryan two years before his contract runs out after a spat with chairman Paul Achleitner that has thrown Germany’s largest lender into turmoil.
Mr Sewing, currently co-head of the bank’s retail division, will take on the job with immediate effect, the bank said in a statement published late on Sunday.
Garth Ritchie, who will become the sole head of the lender’s ailing corporate and investment bank, and executive board member Karl von Rohr, were both named as deputy CEOs.
Mr Ritchie’s current co-head and deputy CEO Marcus Schenck informed Mr Achleitner over the Easter break that he wanted to leave after May’s annual meeting as the bank was not committing enough resources to secure the investment bank’s global position, according to a person who knows Mr Schenck.
Mr Sewing, 47, who has been with Deutsche Bank since he was a teenager, has previously held posts including head of group audit, deputy chief risk officer and chief credit officer. “In his more than 25 years at Deutsche Bank Christian Sewing has proven himself a strong and disciplined leader,” Mr Achleitner said in the lender’s statement.
Investors in Deutsche Bank welcomed the appointment, saying it had drawn a line under the lender’s boardroom battle and ended a two-week leadership crisis that had threatened to destabilise Germany’s largest bank.
“The situation over the last two weeks had become untenable. It’s good that the uncertainty has now been resolved,” said Hans-Christoph Hirt, executive director at Hermes EOS, which advises and represents around 0.5 per cent of the voting rights. He added that Mr Sewing was “a credible internal candidate”.
Ingo Speich, fund manager at Frankfurt-based asset manager Union Investment, which holds around 0.3 per cent in the lender, called the decision for Mr Sewing a “sensible solution”.
A person close to one of Deutsche’s biggest shareholders pointed out that Mr Sewing enjoyed a large degree of trust among the bank’s regulators.
Yet three top-10 shareholders on Sunday voiced their deep frustration with Mr Achleitner’s handling of the situation.
“His days as chairman should be numbered,” one of the lender’s biggest investors told the FT, adding that he was “just the lesser of two evils”.
A person at another leading investor in Deutsche Bank said it was “beyond doubt that Mr Achleitner botched his job”. A third key shareholder said his record at the lender was “devastating” but pointed out that his position nonetheless seemed secure. Shareholders extended Mr Achleitner’s term by five years at last year’s annual shareholder meeting.
Mr Achleitner’s frustration with Mr Cryan’s perceived lack of leadership and the incomplete implementation of the bank’s cost-cutting strategy were the main reasons for the rift between the chairman and CEO, two people familiar with Mr Achleitner’s thinking told the FT.
“Following a comprehensive analysis, we came to the conclusion that we need a new execution dynamic in the leadership of our bank,” Mr Achleitner said in Deutsche’s Sunday night statement.
“This is not about strategy, but about the failure to execute it,” one of the people familiar with Mr Achleitner’s thinking said.
Investors have a different view. “The strategy and its implementation is ultimately the chairman’s responsibility,” said Mr Hirt. He added that Mr Sewing would be the third CEO during the six years of Mr Achleitner’s tenure. “Mr Achleitner will have to answer some serious questions in the run-up to and at the shareholder meeting.”
Two weeks ago it was revealed that Mr Achleitner had started to look for a replacement for Mr Cryan and informally approached several senior European bankers, including UniCredit boss Jean-Pierre Mustier and Standard Chartered’s Bill Winters, according to people familiar with the matter. Both Mr Mustier and Mr Winters declined the job.
Mr Cryan has a contract until 2020 and in a letter to the bank’s 98,000 employees before the Easter holidays, he stressed he was “absolutely committed to serving our bank”.
Mr Cryan, who took charge in 2015, began a five-year turnround plan to sort out legal legacy issues, bring down costs and modernise the bank’s dated IT systems. The bank last year reported the third annual net loss in a row and had to abandon its 2018 cost-cutting target.
The investment bank is suffering from falling revenue and lacklustre cost improvements. Chief financial officer James von Moltke in March flagged that further headwinds in the first quarter dented revenues by about €450m. The integration of Deutsche Bank’s German retail brand Postbank into its own operations is also behind schedule.
Since the start of the year, shares in Deutsche Bank have fallen 28 per cent, compared with a 5 per cent drop in the Dax blue-chip index.
