Shares in Deutsche Bank AG jumped as much as 8% in early European trading on Monday after the lenders co-Chief Executive Officers Anshu Jain and Jürgen Fitschen announced their resignations on Sunday and will be succeeded by former UBS CFO John Cryan.
The top management shuffle at Deutsche comes only a month after the announcement of a cost-cutting plan aimed at turning around the banks sub-par performance. The strategy, however, met shareholder skepticism due to the lack of detail and a poor track of meeting targets, accompanied by staff discontent with the prospects of thousands of job cuts.
The two top managers faced a big protest at the companys annual shareholder meeting two weeks ago, where in a vote over their performance 39% of the capital represented voted against them, and some investors called for their departure.
Mr. Cryan will assume the role of co-CEO on July 1st, 2015, succeeding Mr. Jain who will step down on June 30th, 2015, the bank said. It has asked Mr. Jain to remain as a consultant at the lender through January 2016. Meanwhile, Deutsches board has also asked Mr. Fitschen to remain in his current role of co-CEO until the conclusion of the annual shareholder meeting on May 19th, 2016, to help ensure a smoother transition. Following Mr. Fitschens departure, Mr. Cryan will become Deutsche Banks sole chief executive officer.
Paul Achleitner, chairman of Deutsches supervisory board, said: “John is not only a seasoned banker with extensive experience in financial matters but also espouses the professional and personal values required to advance Deutsche Bank and Strategy 2020. He knows the bank well, and we are convinced that he is the right person at the right time.”
The top management shuffle was broadly well received, with investors hoping that Mr. Cryan will be able to take more radical action than Mr. Jain. The former UBS chief financial officer is well-known for his key role in the complex restructuring of the Swiss bank that helped steer it through the financial crisis.
“With the appointment of a highly-regarded new CEO, improving underlying momentum as well as scope for improving execution and returns, we believe that Deutsche Bank is at a pivotal point,” said for the Financial Times Kinner Lakhani, an analyst at Citi.
However, analysts also warned that it would take time for Mr. Cryan to turn around the banks performance. The restructuring strategy, which involves leaning the investment banking operations and selling the Postbank retail unit, is designed to boost cost savings by an annual €3.5 billion by 2020 and drive a return on tangible equity of at least 10%.
Deutsche Bank AG traded 6.32% higher at €29.36 per share at 09:51 GMT in Frankfurt, marking a one-year jump of 4.21%. The lender is valued at €38.09 billion. According to the Financial Times, the 34 analysts offering 12-month price targets for Deutsche Bank have a median target of €30.00, with a high estimate of €39.00 and a low estimate of €23.00. The median estimate represents an 8.64% increase from the previous close of €27.62.
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