‘Sparring’ is another blow to Deutsche Bank

Bloomberg

The silence all day spoke volumes about the disarray at the top of Deutsche Bank AG, say insiders and shareholders. No one at the bank — from spokespeople to the highest-ranking executives — commented publicly on a string of media reports and investor speculation that either Chairman Paul Achleitner or Chief Executive Officer John Cryan, or both, was on his way out.
With rumors and speculation — and plenty of snark — swirling, Achleitner continued on his
vacation while Cryan remained out of his sight.
“The bank is in a crisis. The open discussion of Cryan’s succession has the potential to damage Achleitner too,” said Michael Huenseler, a portfolio manager at Assenagon Asset Management, which owns stock in Deutsche Bank. “It doesn’t help in finding a replacement for Cryan either. Any potential candidate will now fear being left in the rain, and others are already rumored to have turned down the offer.”
It’s the latest blow for the 148-year-old institution that has struggled for the better part of a decade to recover from the financial crisis that exploded in 2008. Cryan, in office since July 2015, is working on his third strategy reset.
Achleitner is coming under fire for having gone through three CEOs in the past six years with little to show for it.
The pressure on Deutsche Bank continued to rise, with two big German newspapers calling for leadership change. Handelsblatt said Cryan should step aside, while Germany’s leading broadsheet FAZ said UBS Chairman Axel Weber should replace Achleitner.
The shares have declined about 29 percent this year, the second-worst performance in the 42-member Bloomberg Europe 500 Banks and Financial Services Index, and have been cut by more than half since Cryan took over.
The stock added 1.1 percent to 11.31 euros in Frankfurt trading. Cryan has struggled to maintain investor backing after failing to return the lender to “controlled growth” in his latest strategy revamp. A sustained slide at the investment bank has led to hundreds of job cuts.
“Deutsche Bank’s restructuring isn’t going as some had hoped and that’s bound to raise questions about management,” said Daniel Regli, an analyst at MainFirst in Zurich who has an underperform recommendation on Deutsche Bank shares.
The latest convulsion hit with the Times of London reporting that the lender was considering removing Cryan amid heightened tensions between him and Achleitner. Among possible candidates the Times named were Richard Gnodde, head of Goldman Sachs Group Inc.’s international operations, but he’s thought to have spurned the overture, it said. Achleitner also spoke with UniCredit SpA CEO Jean Pierre Mustier and Standard Chartered Plc CEO Bill Winters about potentially taking the job, people familiar with the matter said.
His discussions have focused on a leader who speaks German and who works well with regulators. One top shareholder — asking
not to be identified discussing sensitive matters — said Cryan remains the best choice for CEO as long as Achleitner can’t present a better option.

STRAINED RELATIONSHIP
The relationship between Achleitner and Cryan has been strained for a while. The chairman has been critical of the CEO’s performance and was taken aback last year when Cryan discussed the prospect of a contract renewal in interviews with Bloomberg and Handelsblatt, according to people familiar with the matter. That deterred efforts to prepare for a possible succession, they said.
While much of the 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.