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Deutsche Bank AG announced sweeping changes to its senior management ranks and a broad restructuring of key units Sunday as new co-CEO John Cryan put his stamp on the giant German lender.
A little more than three months into his tenure, Mr. Cryan is reshaping all four of the bank's business divisions. The lender said it must be less complicated and more responsive to regulators, as it aims to recover from a series of financial and legal missteps and cut costs under pressure from stricter European and U.S. banking regulations.
The bank had earlier indicated it would provide more details behind a strategic plan announced earlier this year, but the scale and direction of change have been kept largely under wraps.
The shake-up announced Sunday, after Deutsche Bank directors wrapped up a meeting in Frankfurt, came a week and a half before the company will report what it has said will be a projected $7 billion loss for the third quarter.
The changes also underscore the immense challenges Europe's biggest investment banks face in competition with their U.S. rivals, which analysts and investors see as better-prepared for tougher risk controls and beefed-up capital requirements.
Banks from Barclays to Credit Suisse Group AG, which like Deutsche Bank have new CEOs, have lagged behind U.S. competitors in share performance and also face deep cuts.
The weekend changes revealed a reshuffled management lineup–noticeably absent several longtime executives close to recently departed co-CEO Anshu Jain–who will be responsible for new financial targets to be disclosed Oct. 29.
Those targets will form the benchmarks by which investors judge Mr. Cryan and his lieutenants.
Deutsche Bank on Sunday said that Colin Fan, its investment-banking co-head overseeing securities trading since 2012, will resign effective Monday. The Wall Street Journal earlier Sunday reported that he would leave his role and that Garth Ritchie, the current global equities head, would be promoted.
Mr. Ritchie will replace Mr. Fan to oversee global markets and trading and will also join a revamped management board.
The bank is abolishing committees and streamlining how its main units are represented on the management board, which is responsible for overseeing strategy, compliance, personnel and governance of businesses globally.
Deutsche Bank has had prolonged discussions with BaFin, the German financial watchdog, over the need to refresh top leadership ranks, according to people familiar with the matter. BaFin earlier this year sharply criticized the bank and some senior executives for allegedly failing to stop years of attempted market manipulation, and for a corporate culture that let problems fester.
The reorganized board will "build a better Deutsche Bank," Mr. Cryan said in the bank's statement, describing the aim as being "better controlled, lower cost, and more focused." That agenda includes widespread cuts and efforts to mend relationships with regulators.
Henry Ritchotte, Deutsche Bank's chief operating officer, will leave the management board and work on creating a new digital bank for the company, according to the statement. The effort is seen as a big push by the bank into the so-called "fintech" arena, encompassing everything from retail banking to debt underwriting and digital-currency trading.
The highest-profile structural move to directly affect clients globally will be a split of Deutsche Bank's investment bank into two pieces: one focused on mergers and other corporate deals, securities-underwriting and transaction banking services such as trade finance and institutional cash management, and the other on trading and global markets.
Current investment-bank co-head Jeff Urwin will run the investment-banking division starting in January, with Mr. Ritchie overseeing the hived-off trading and markets division. Mr. Urwin will replace Stefan Krause, Deutsche Bank's former finance chief, on the management board. Mr. Krause will leave the bank at the end of this month.
Besides Mr. Fan, other senior executives closely affiliated with former co-CEO Mr. Jain, who left in July, will leave, including Michele Faissola, currently head of the bank's asset and wealth-management business.
That business also will be restructured. Quintin Price, until recently a senior executive at BlackRock Inc., will oversee asset management for institutional clients and funds, and will serve on Deutsche Bank's management board.
High-net-worth individual clients will now be served by an independent private wealth-management unit, as part of the bigger division serving private and business clients, under Christian Sewing.
For the seven months until Mr. Cryan becomes sole CEO of Deutsche Bank, co-CEO Jürgen Fitschen will remain responsible for management of geographic-region oversight at Deutsche Bank. Mr. Fitschen is expected to leave at the time of the bank's May 2016 annual meeting.
North America CEO Jacques Brand will report to Messrs. Cryan and Fitschen while serving as chairman of the bank's newly created U.S. holding company, which faces enhanced regulatory and capital requirements.
Deutsche Bank Chairman Paul Achleitner said the restructuring requires tough decisions, and is a "fundamental reorganization" that stands out in the bank's long history.
Source: Bloomberg
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