FRANKFURT Jan 29 Deutsche Bank's
co-chief executives face a stormy annual news conference on
Wednesday over scepticism about their earnings targets and their
ability to deal with a deepening list of scandals.
Anshu Jain and Juergen Fitschen have made 2014 a
make-or-break year by sticking to their medium-term growth
targets despite a slide in revenue at their once dominant
debt-trading business and mounting legal bills arising from
Last year, Deutsche paid out 2.5 billion euros in fines and
settlements, more than halving the amount the bank had in
reserve for such payouts.
The trading environment and regulatory requirements have
worsened since Jain and Fitschen took over in 2012. Germany's
financial regulator, Bafin, is intensifying scrutiny amid
apparent displeasure over how Deutsche is dealing with
allegations its traders were involved in manipulating benchmark
Bafin has questioned the rigour and independence of the
bank's internal probe into alleged rigging of Libor, the London
inter bank offered rate, according to documents leaked to German
It is only the latest in a line of battles between Bafin and
Germany's largest bank. In 2012, the regulator refused to
approve Anshu Jain's first choice as chief risk officer, William
Broeksmit, who retired from Deutsche a year ago, was found
dead at his London home on Sunday in what appears to have been a
suicide. He was one of Jain's closest allies and a principal
actor in Deutsche's efforts to reduce the size of its balance
sheet in the wake of the global financial crisis.
News of Broeksmit's death disquieted Deutsche staff, already
girding for tough questions at Wednesday's news conference.
The bank was scheduled to release its fourth quarter results
on the morning of the news conference but rushed them out late
last week when it emerged litigation and restructuring costs
along with the slide in fixed income trading had pushed the bank
to a surprise quarterly loss.
Despite the loss, Jain and Fitschen are sticking to the
bank's reform targets for 2015, which include cost-cutting and
achieving a return on equity of 12 percent, six times higher
than in 2013.
Deutsche is about one-third of the way through a crash-diet
plan launched in June to cut 250 billion euros ($338.61
billion)from its balance sheet. The faster the bank trims, the
easier it is for the bank to meet regulators' capital demands.
But with rising legal bills and disappointing earnings,
fears of a dividend cut or capital raising have put Deutsche
Bank stock under pressure.
The shares are mostly flat compared to 12 months ago, well
behind the 10 percent gain seen in the broader index for
European banks. Deutsche has a forward price/earnings
ratio of 9.1 versus 12.7 for rivals, according to StarMine data,
and therefore plenty of room to catch up.
(Writing by Carmel Crimmins; editing by Thomas Atkins and David