Deutsche Bank CEO gets no relief as his biggest hire exits

Bloomberg

John Cryan’s plan to revamp Deutsche Bank AG risks unraveling as the departure of the chief executive officer’s most senior hire presents one more false start to a strategy he laid out last year.
Quintin Price, hired in October to oversee growth in the bank’s asset-management business, is leaving the bank after going on medical leave in mid-April, Germany’s largest lender said. In the last two weeks, Cryan has abandoned plans for a new digital bank in the US and said the firm will struggle to sell its German retail unit Postbank. A sale of its British insurance business, Abbey Life, is complicated by a regulatory inquiry, according to a person familiar with the matter.
Price’s departure and the stalled sales threaten progress on half of the six priorities Cryan detailed in his plan to boost capital levels and profitability by simplifying the lender and shrinking the trading business. The British banker, who took the helm last year, is battling to restore investor and employee confidence after his firm’s shares fell by a third this year, outpacing the decline of its European peers.
“The bank is too complex and too big,” said Enrico Racioppi at Hammer Partners SA in Lugano, Switzerland, who has a sell rating on Deutsche Bank shares. “It’s a difficult task that John Cryan is trying to sort out.”’
Price, the only member of Deutsche Bank’s management board who joined after Cryan became co-CEO a year ago, asked to end his contract from June 15 after consulting with his doctors. Price, 54, will focus on his treatment plan, Cryan said in a note to employees, without elaborating on his condition. Cryan said he will represent the business on the management board while the bank searches for a successor.
“Asset management is absolutely crucial, and Price had been an important hire,” said Chris Wheeler, an analyst at Atlantic Equities LLP in London. “Now Cryan has another distraction that’s going to take him away from the execution of the strategy that he’s laid out.”
A former BlackRock Inc executive, Price was brought in to tap a larger share of institutional investors and grow assets under management faster than the broader market.
Jon Eilbeck, global chief operating officer and regional head of Asia Pacific at Deutsche Asset Management, will continue to lead operational responsibilities for the business on an interim basis.
“For Cryan, it’s a setback,” said Benno Galliker, a trader at Luzerner Kantonalbank AG in Lucerne, Switzerland.

“But I don’t see it as extremely negative. Price is not leaving because of an argument, or because he feels it’s going in the wrong direction.”
Cryan, who took over as sole CEO earlier this year, said at a conference in May that while most of the restructuring will be done by the end of the year, the lender has to “step up attention to our trading businesses” given the current market environment, with client volumes “clearly down.”
His efforts may get some help from trading results this quarter. Deutsche Bank’s fixed income unit should benefit from U.S. rates revenues, which have been “driven by strong client activity” ahead of uncertainty over the Federal Reserve’s interest rate decision, Kian Abouhossein, analyst at JPMorgan Chase & Co., said in a note this week. Abouhossein called the company his top pick among investment banks.
The German bank has faced 12.6 billion euros ($14.4 billion) of legal costs and provisions since the start of 2012, more than any other lender on the European continent. Deutsche Bank’s legal matters also generated headlines in April when a supervisory board spat spilled into the open. Georg Thoma, a director who oversaw a committee probing wrongdoing, resigned after Deputy Chairman Alfred Herling accused him of being “overzealous.”
The turmoil led to criticism for supervisory board chairman Paul Achleitner at the bank’s annual meeting last month, while Cryan won the support of most investors.
“Mr. Cryan, we think you are the right man at the right time and have to pick up the pieces that your predecessors have left you,” Ingo Speich, a fund manager at Union Investment, one of the bank’s top 20 shareholders, said at the meeting. “Deutsche Bank is in the worst crisis of its history.”