FRANKFURT (Reuters) - Once one of Germany’s chief power brokers in finance, Deutsche Bank Chairman Paul Achleitner’s switch of chief executive has triggered criticism that it was rushed through, casting a cloud over his own future.
Earlier this week, Achleitner forced out CEO John Cryan after a row that centred on what some describe as Cryan’s ‘indecisiveness’ in cutting jobs and costs, according to people with direct knowledge of the matter.
Pressure had built as the group’s share price tumbled in recent months, with problems further compounded by heavy losses.
Achleitner now hopes the appointment of Christian Sewing, who is expected to outline his plans in the coming weeks, will give fresh impetus to management albeit without any big change in strategy, those people said.
Cryan’s departure, orchestrated by Achleitner, who broke off a family Easter holiday in Peru to travel to New York and London to forewarn some investors, took many other major shareholders by surprise, the sources said.
The rushed nature of the replacement, sealed at a hastily convened Sunday meeting of non-executive directors, has prompted criticism of Achleitner and his role at a bank that was once the flagship of Europe’s top economy but is now floundering.
It is the second change of CEO under his watch.
“Achleitner ignored things for too long. He should have given the bank direction,” said Hendrik Leber, a fund manager at one of the bank’s shareholders, Acatis Fondsmanager.
A spokesman for the bank declined to comment.
Achleitner had discreetly prepared for the change over many months, the people who spoke to Reuters said.
But for those outside the small circle of managers involved, the announcement came unexpectedly, prompting some to question why Cryan had to go as the bank continues a delicate turnaround.
“Why was it necessary to appoint a new CEO at this point?” said Hans-Christoph Hirt of Hermes EOS, which represents pension funds and other investors, adding that Achleitner had “overseen a number of strategic U-turns” and multiple management changes.
Some of the group’s largest shareholders also have similar misgivings about the decision to appoint Sewing, a manager who joined the bank from school and who had a low profile before being appointed as chief executive.
One person with knowledge of the meeting where directors were told of the CEO switch said Achleitner presented the change as a done deal, offering no alternative candidate and leaving them with little choice but to reluctantly agree.
Achleitner, the person said, appeared “irritated” by the discord during what was a tense three-and-a-half hour gathering, where directors, including those representing large shareholders, dialled in from around the globe.
Translation of the conversation into different languages further drew out the discussion, as Sewing waited in a room nearby in case he should be asked to join.
Achleitner has defended his action. “There was lack of speed by the management board in making decisions and executing them,” he told a German newspaper this week.
Others echo this view. “John Cryan is nice, a really lovely guy,” said one former colleague, who worked with him at Deutsche.
“If you tell him there are risks associated with making cuts, he wants to analyse those risks to death before going ahead. Real cost-cutters say: ‘I need 100 heads to roll in this division’.” Cryan, a British former UBS banker, could not be reached for comment.
But dissatisfaction over the manner of his replacement may have repercussions for the Austrian financier - Achleitner had preferred to discreetly exercise his influence but now finds himself centre stage.
Achleitner is already facing a backlash at the bank’s annual shareholder meeting on May 24.
One investor, Ralf Kugelstadt, filed a motion to that meeting urging investors to vote against ratifying the supervisory board’s actions for the past year. Such a move is equivalent to calling a vote of no confidence.
“It is time for all of this fiddling around without a vision to stop. Lead Deutsche Bank into the future and not into irrelevance,” Kugelstadt wrote in his proposal posted on April 9.
Whatever the protest, Achleitner, whose term as chairman continues until 2020, does not intend to resign.
He is a seasoned executive, who has survived corporate storms in the past, such as when he helped mastermind insurer Allianz’s 24-billion-euro takeover of Dresdner Bank, a business that later racked up heavy losses before being sold on.
Achleitner remains influential in German business and sits on the supervisory board of car giant Daimler and Bayer. He shares an office in Munich with Joachim Faber, the chairman of Deutsche Boerse, the country’s stock exchange operator.
His wife, Ann-Kristin Achleitner, is an academic who also sits as a non-executive director on the supervisory boards of Deutsche Boerse and reinsurer Munich Re.
Achleitner has sought to distance himself from Deutsche’s strategic blunders.
But Wolfgang Gerke of the Bavarian Financial Centre, a research institute, said he bore responsibility, alongside executives. Asked whether he should resign, he said: “His wife is a friend of mine, but the truth is, yes.”
It now falls to Sewing to take up where Cryan left off. The years-old conundrum of whether or not to focus on international investment banking or build a steady if unexciting German retail business remains.
For three decades, the bank’s primary focus was building up its investment bank into a global powerhouse. That rapid growth landed the bank in hot water, and since then, the bank has flip-flopped as it tries to define its mission.
The bank is conducting a global review of its investment unit and is expected to present early results in weeks.
“I can imagine that we make adjustments in the investment bank, also in some regions,” Sewing said on national television on his first day in the job.
But patience is running out.
“Deutsche Bank doesn’t just need a change of people, it needs a sustainable strategy to steer it into calmer waters,” said Gerhard Schick, a German lawmaker with the Green party.
“In this respect, Achleitner, in what he has done, has not really been convincing.”
Additional reporting by Edward Taylor, Hans Seidenstuecker, Andreas Framke and Arno Schuetze in Frankfurt and Gernot Heller in Berlin; writing By John O'Donnell; Editing by Adrian Croft