What’s happened at Deutsche Bank?
Over the weekend both of Deutsche Bank’s chief executives (that’s right, there are two) announced they would resign. Anshu Jain will leave on July 1 after three years as co-CEO of the German bank. John Cryan, a Brit, will take his place.
When Jürgen Fitschen, the other co-CEO, leaves next May, Cryan will become the sole leader of the bank.
Why did Jain and Fitschen leave?
Deutsche Bank's earnings halved in the first quarter of 2015.
It was also fined $2.5 billion for rigging the Libor interest rate that banks use to lend to one another in April. Just last month a US regulator fined the bank another $55 million for hiding losses during the financial crisis. Meanwhile an investigation has begun into whether the bank was laundering money at its Russian unit.
To make matters worse, Jain, who was born in India, is said to never have mastered German. He reportedly struggled to talk to investors.
Fitschen was also dealing with allegations that he gave misleading evidence in civil court case in 2011 involving the heirs to the Kirch publishing empire - which required him to travel to Munich a lot for court appearances.
Why should John Cryan do any better?
Cryan has some experience turning around banks – he helped UBS return to form between 2008 and 2011. He is known as a cautious pair of hands, which may be just what Deutsche needs after the regulatory uncertainty.
Cryan has been a non-executive director on Deutsche Bank's supervisory board since 2013 – so he knows the challenges that await him.
What’s the reaction been like so far?
Pretty good. Shares were up as much as 8.2 per cent, one of the biggest leaps in two years.
"With John Cryan as CEO, we think that Deutsche is transitioning from one of the least credible management teams in investors’ minds to one of the most highly regarded," Omar Fall, an analyst at Jefferies in London, wrote in a note to clients.