business

Deutsche Bank Plans Board Shifts as Chiefs’ Future Is Questioned

  • Thain is among nominees expected to fill positions this year
  • German lender is struggling despite multiple strategy resets

John Thain Expected to Join Deutsche Bank Board in May

Deutsche Bank AG is preparing to reshuffle its supervisory board as the future of Chief Executive Officer John Cryan and Chairman Paul Achleitner is called into question.

John Thain, a former CEO of Merrill Lynch, is expected to join the troubled German bank in May, according to a person with knowledge of the lender’s plans. He is one of four nominees invited by the supervisory board, which is led by Achleitner, to fill positions coming open this year, said the person, who asked not to be identified because the matter isn’t public.

John Thain

Photographer: Chris Goodney/Bloomberg

Cryan has been struggling to retain investor backing amid a slump in revenue despite resetting strategy since taking over in 2015. Concerns about the bank’s turnaround prompted Achleitner to hold discussions with potential successors, people with knowledge of the discussions said last week. The chairman is also coming under fire for having failed to forge a recovery after going through three CEOs in six years.

"I definitely welcome the overhaul of the supervisory board, although I would have liked to see it happen earlier," said Andreas Meyer, who manages fixed-income securities including Deutsche Bank bonds at Aramea Asset Management in Hamburg.

He noted the shift to more directors with financial-sector backgrounds on the board, though a balance might be preferable, he said. "Should Achleitner now decide to replace Cryan, he has to step down as well," said Meyer. "He has been chairman of the supervisory board since May 2012, and that means he shares responsibility for the current situation."

Bloomberg’s Peggy Collins discusses the possibility of John Thain joining the board at Deutsche Bank.

Daybreak: Americas." (Source: Bloomberg)

Others are even less enthusiastic.

“Thain probably has sufficient knowledge of banking, but he also brings the image of a past era,” said Ingo Frommen, an analyst at Landesbank Baden-Wuerttemberg who has a hold recommendation on Deutsche Bank shares. “We think it is the wrong signal for all share- and stakeholders.”

Absolutely Committed

Speculation about Cryan’s position prompted the executive to tell staff on March 28 that he’s “absolutely committed” to serving the bank and continuing his work.

The public discussion about Cryan’s future is hurting the company, Frommen said. M.M. Warburg analyst Andreas Plaesier agrees. “What’s happening right now is counterproductive and it’s extending the restructuring,” he said in an email.

It’s the latest challenge to hit the 148-year-old institution, which has struggled to recover from the financial crisis that exploded in 2008. A sustained slide at the investment bank has contributed to hundreds of job cuts as the firm seeks to curb costs and improve returns. The shares have declined nearly 30 percent since the start of the year.

The bank is now conducting a fresh review of its trading businesses, Bloomberg News reported last week. Cryan is examining activities where Europe’s largest investment bank is trailing competitors to determine if it should try to win back market share or exit, said people familiar with the review, dubbed Project Colombo.

“The market is very focused on the degree to which over the past several years we’ve lost market share,” Chief Financial Officer James von Moltke said at a conference last month. Still, the bank’s executives “feel good” that the firm held its position in fixed-income trading in 2017, while the company “clearly lost some market share” in its smaller equities business, he said.

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 beyond 2020 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 also criticized Achleitner for failing to replace Cryan sooner. Other analysts and investors -- pointing to the turmoil at the bank during his tenure -- have said the chairman also bears responsibility for the bank’s travails.

New Faces

Michele Trogni, a former executive at IHS Markit Ltd. and UBS Group AG, and Mayree Clark, a former Morgan Stanley wealth-management executive, are set to join the board along with Thain, said the person.

Deutsche Bank supervisory board members whose terms expire this year are Johannes Teyssen, Dina Dublon, Henning Kagermann, and Louise M. Parent.

Achleitner has contacted possible candidates including Juerg Zeltner, UBS Group AG’s former wealth-management chief, about replacing Cryan, but the talks haven’t progressed to an offer for the post, people with knowledge of the matter told Bloomberg News. Other possible options included Standard Chartered Plc CEO Bill Winters and UniCredit SpA chief Jean Pierre Mustier, the people said.

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