With Deutsche Bank shares heading back toward their 2016 postcrisis lows and yields on DB default swaps moving sharply higher, the Times of London reported Tuesday that Germany's largest lender is planning to part ways with CEO John Cryan after the CEO fell out of favor with Supervisory Board Chairman Paul Achleitner.
Though the Times didn't specify where it got the information, it said the bank approached Richard Gnodde, the head of Goldman Sachs Group Inc.’s international operations, but he’s believed to have spurned the overture. Deutsche Bank also considered UniCredit SpA CEO Jean Pierre Mustier and Standard Chartered Plc CEO Bill Winters, according to the report.
"Cryan may be a good person, but he’s not the right guy on top of Deutsche Bank," Stefan Mueller, CEO of the German Institute for Asset and Equity Allocation and Valuation, said in an interview with Bloomberg TV. Still, "I think the main problem at Deutsche Bank is Paul Achleitner, he implemented all these CEOs in the last years."
The Times' anonymous source praised Cryan, but said he struggled to get along with Achleitner.
The source said: "It is quite clear the relationship is broken between the chief executive and the chairman." The source added that Cryan was "outstanding" but was fighting a battle with Achleitner over cuts to the investment bank, leading to a stalemate. Cryan’s contract runs until 2020.
Disagreements between Cryan, 57, and Achleitner, 61, have emerged over bank strategy, with the CEO and Chief Financial Officer James von Moltke pushing for a more radical restructuring of businesses, including the investment bank. Cryan also angered Achleitner last year by avoiding a meeting with one of the company’s top shareholders, HNA Group Co. The Chinese government has since pushed the indebted conglomerate to unwind an acquisition binge to pay down some of its massive debt load, sending DB shares spiraling lower as investors pull their money in a liquidation panic.
Since saying it wouldn't sell its DB stake, HNA has sold off a chunk of stock equivalent to 1.1% of the company's float.
DB shares are down 60% since Cryan took over as co-CEO in 2015. Shares have shed 10% of their value in the past week following a profit warning from the bank.
DB has struggled to raise cash to shore up its troubled balance sheet. The lender has undertaken three fundraisings in the past eight years, raising nearly €27 billion. Last week, the bank spun out its asset management business via a stock market flotation, raising about €1.4 billion.
One person close to the bank said that it needed to look outside its existing ranks for a replacement as internally there was "no one as good as John." However, one former insider said Marcus Schenck, co-head of corporate and investment banking, was viewed internally as a strong candidate.
Bloomberg reported that the bank approached Richard Gnodde, the head of Goldman Sachs Group Inc.’s international operations, but he’s thought to have spurned the overture, the newspaper said. Deutsche Bank also considered UniCredit SpA CEO Jean Pierre Mustier and Standard Chartered Plc CEO Bill Winters.