(Bloomberg) -- Deutsche Bank co-CEO John Cryan is considering the biggest overhaul of the lender’s management structure in more than a decade, according to a person with knowledge of the matter.
The German lender is looking at abolishing the 19-member group executive committee, which advises the management board led by Cryan and co-CEO Juergen Fitschen, said the person, who asked not to be named as the deliberations are private. The plan is preliminary and may not be carried out, according to the person. A spokesman in Frankfurt declined to comment.
Cryan, 54, who took over from Anshu Jain last month, is seeking ways to boost capital and shore up profitability, as Europe’s biggest investment bank grapples with mounting litigation costs. With regulators pushing lenders to cut their risk and investors calling for lower costs, the co-CEO is under pressure to shrink the securities unit.
“The bank’s processes are just too costly and Cryan faces a Herculean task given he’ll have to turn Deutsche Bank upside down,” Ingo Frommen, an analyst at Landesbank Baden- Wuerttemberg in Stuttgart, Germany, who has a hold recommendation on the stock. “We expect changes to the GEC and management board in the fall.”
Deutsche Bank shares fell for a fifth straight day. They have increased about 12% this year.
The plans were earlier reported by Manager Magazin.
FASSIOLA, FAN
As part of the revamp, the Frankfurt-based lender is also considering promoting managers at its operating businesses to the management board, according to the person.
All eight of Deutsche Bank’s management board members sit on the executive committee along with the heads of its four operating units. The group includes Colin Fan and Jeff Urwin, who run the investment bank, Werner Steinmueller, who oversees transaction banking, and Michele Faissola, head of asset and wealth management. Christian Sewing, who runs the unit catering to consumers as well as small and medium-sized companies, is a member of both the executive committee and the management board.
Josef Ackermann, who stepped down as CEO in 2012, set up the executive committee in 2002 to speed up decision making. Jain and Fitschen initially expanded the committee to 18 members from 12, promoting Fan, Faissola and other bankers. They later named other executives to the panel to add expertise in compliance, regulation and strategy.
INVESTMENT BANK
Cryan, a former chief financial officer of UBS Group AG, is also overhauling the fixed-income division. The unit’s products and services are being divided into six main groups, with leaders for three of them reporting to Fan, according to an internal memo obtained by Bloomberg this week.
The German lender is looking for ways to cope with tougher regulatory scrutiny amid a slump in debt trading. The world’s nine largest investment banks saw their combined revenue from trading fixed income, currencies and commodities fall 7% to $68.4 billion last year, a second annual decline, data compiled by Bloomberg show.
Under Jain, who rose through the ranks of Deutsche Bank’s investment bank after joining in 1995, the lender increased average equity at the securities unit by 37% to 32.5 billion euros ($36 billion) in the second quarter from a year earlier as competitors retrenched from debt trading.
