Deutsche Bank AG co-Chief Executive Officer John Cryan has the most challenging job among all of his European counterparts in turning around the German lender, Aberdeen Asset Management Plc CEO Martin Gilbert said.
Gilbert, 60, speaking in a Bloomberg Television interview with Francine Lacqua, said CEOs like Credit Suisse Group AG’s Tidjane Thiam and Barclays Plc’s Jes Staley have other parts of the business that they can rely on for earnings growth other than investment banking.
“John Cryan at Deutsche has a tough job,” said Gilbert, whose firm oversees more than $420 billion in assets. “Tidjane has a very good wealth manager that he can fall back on and Barclays have a very good retail bank with mid-teen return on equities,” he said referring to the measure of profitability. “They have all got good bits and all have investment banks that they are trying to downsize.”
Deutsche Bank’s shares have dropped about 36 percent this year and are among the worst performing banks in Europe. While Cryan, 55, has scrapped dividends, earmarked assets for sale and vowed to eliminate thousands of jobs, earnings have been undermined by 12.6 billion euros ($14.3 billion) in costs related to past misconduct.
“The problem for the European banks, especially with big investment banking arms, is that the U.S. firms have won,” said Gilbert, who owns banks stocks including HSBC Holdings Plc and Standard Chartered Group Plc. “What we are seeing is a retrenchment back to profitable bits within investment banking. ”
Deutsche Bank, Europe’s largest investment bank, is stuck in a “vicious circle” and would struggle to raise the capital it needs from investors, Berenberg’s James Chappell wrote in a note to investors Monday. He cut his rating to sell from hold.