* Aims to settle most of its main legal headaches in 2014
* Cut pay in CBS unit by 14.4 pct to 5.3 bln euros in 2013
* Jain defends his ability to oversee cultural change
* Intends to lead regional consolidation after 2015
By Thomas Atkins and Arno Schuetze
FRANKFURT, Jan 29 The reputational risks
surrounding Deutsche Bank have grown and it still has
some way to go to win back public trust and prove it can
overhaul its corporate culture, the bank's two chief executives
said on Wednesday.
Germany's largest lender is facing an array of
investigations into the conduct of its employees and a jump in
litigation costs was partly responsible for a surprise 1 billion
euro ($1.37 billion) fourth-quarter loss that has heaped more
pressure on Anshu Jain and Juergen Fitschen.
"We know that here we have something to prove to you,"
Fitschen told reporters at the bank's annual news conference in
Frankfurt. "We have realised that the reputational risk has
become more and more significant."
Deutsche Bank paid about 2.1 billion euros in fines in
December, but fresh investigations - including one into possible
manipulation of the $5.3 trillion-a-day foreign exchange market
- have led analysts and investors to forecast an additional 1.4
billion to 2 billion euros in settlement costs for 2014 and
The bank has moved to shake up corporate practices,
particularly at its investment banking operations in London and
New York, turning down deals viewed as too risky, deferring
bonuses for dealers and giving them less leeway on trades.
Deutsche Bank cut pay in its corporate banking and
securities division to 5.3 billion euros last year, down 14.4
pct from 2012.
The number of front office staff in corporate banking and
securities fell 2 percent during the year to 8,435, although the
compensation figure for that division also includes pay for some
other staff, the bank said.
Compensation and benefits across the entire bank was 12.3
billion euros last year, down 8.7 pct from 2012.
Jain admitted that the more cautious attitude had lost
Deutsche business but said he was happy to pay that price and
was confident that most of the litigation problems would be
sorted out this year.
"We are hopeful that towards the end of 2014 we will have
the bulk behind us," he said.
The ability of the duo to oversee the cultural overhaul has
met with scepticism in some quarters, given that Indian-born
Jain once headed the investment bank at the centre of many of
the current tribulations and German-born Fitschen has become
embroiled in an investigation into tax evasion.
Jain said he was accountable for the mistakes that were made
in the investment bank, particularly during the "very
troublesome period" preceding the financial crisis, but insisted
that Deutsche needs his experience.
German financial regulator Bafin questioned the rigour and
independence of the bank's internal investigation into alleged
rigging of Libor, the London inter-bank offered rate, according
to documents leaked to German media.
Fitschen, however, dismissed talk of a breakdown in
Deutsche's relationship with Bafin.
"Don't be led by the tone of voice of one letter," he said.
"There are intensive exchanges on every subject, and these
exchanges can be described by both sides as open and
For all its woes, Deutsche has stuck to ambitious earnings
goals for 2015. These include return on equity of 12 percent,
six times higher than last year, despite a tough trading
environment in its core debt markets.
The bank is aiming to boost returns by shrinking its balance
sheet and is about a third of the way through a crash-diet plan
launched in June to cut 250 billion euros ($338.61 billion) from
The faster the bank trims, the easier it will be to meet
regulators' capital demands.
Deutsche said on Wednesday that it expects the reduction of
non-core assets to slow this year and that its 2013 dividend
will be kept at the same level as the 2012 payout.
Jain and Fitschen also said they were well-positioned to
lead consolidation in Europe after 2015, though they did not
specify when or where deals would happen.
Bankers in Davos last week said they expect a European
Central Bank (ECB) health check of the euro zone's largest banks
this year to reignite domestic and cross-border merger activity
by rebuilding confidence among lenders.
Jain and Fitschen declined to comment on the apparent
suicide of William Broeksmit, a former senior manager at
Deutsche Bank. Broeksmit, who retired from the bank last year,
was found dead at his home in London on Sunday.