Deutsche Bank chairman Paul Achleitner is promising nothing less than a “new era” under the leadership of freshly appointed chief executive Christian Sewing but denies the lender needs a strategic rejig. 

“We should not talk so much about strategy, we should talk about implementation,” Mr Achleitner told German daily Frankfurter Allgemeine Zeitung on Monday. Yet many analysts, investors and rivals do not believe that “a new execution dynamic” promised by Mr Achleitner will be enough to turn around Germany’s largest lender. 

“None of Deutsche’s fundamental strategic challenges is solved by ousting John Cryan,” one of Deutsche’s largest shareholders told the Financial Times. For Hans-Christoph Hirt with Hermes EOS, who advises and represents 0.5 per cent of the voting rights, it is “not really obvious how the new leadership can lead Deutsche Bank back to a path of value creation”. 

Mr Sewing implicitly acknowledged the strategic void in a memo he sent out to the bank’s employees on Monday morning just hours after his appointment in a four-hour supervisory board meeting on Sunday night. “Naturally you will have questions about what our strategy will be going forward,” he wrote to the staff.

But while stressing that “the challenge ahead is a big one” and hinting at potential further cuts in the investment banking division, he was short on substance.

One of the biggest questions is the future of the North American investment bank. The Americas account for more than a third of its overall investment banking revenue but Deutsche has been falling behind its large US rivals.

“The investment bank is poorly positioned by region, by client and by product,” Citi analysts wrote in a note to clients, pointing to its small footprint in the US, an excessive exposure to institutional clients rather than corporates, and bespoke fixed income, currencies and commodities products.

In its emergency meeting on Sunday night, the supervisory board touched upon the future strategic alternatives for the investment bank without taking any decision, a person familiar with the talks told the Financial Times.

One option is to shrink the US sales and trading business drastically and only offer those corporate banking and advisory functions that Deutsche’s German corporate customers really need. The alternative would be marginal trims in the US, with a continued footprint in the sales and trading segment that serves clients such as hedge funds and asset managers. “The bank’s dilemma is that some of those activities are highly lucrative,” the person said. 

An additional headache is that pruning the investment bank is initially likely to make earning worse rather than better. “The challenge with a radial ‘Plan B’ is that you would almost certainly take away revenue before you take away expenses,” a senior Deutsche manager said. “You really have to be careful to do no harm, there are no simple choices.” 

Yet with Deutsche expecting 2018 investment banking expenses to be flat, the need for a change of course has become more and more visible in recent months.

A dogged tug of war between the investment bank’s corporate finance and advisory division — headed by Frankfurt-based Marcus Schenck — and the sales and trading unit led by Garth Ritchie in London has made the strategic dilemma worse.

Deutsche Bank chart

“Garth and Marcus were embroiled in a battle over the investment bank’s direction”, a member of Deutsche’s management board said, adding that with Mr Schenck’s departure and Mr Ritchie becoming the sole head of investment banking, “it looks like Garth won that fight for now”. 

The fact Mr Cryan did little if anything to stop the internal tussles was a key contributor to his dismissal, a number of insiders said. “He acted like a bystander and did not show leadership,” said one. 

The rift with the chairman started when Mr Cryan a year ago said in public he could imagine remaining in the job beyond 2020, when his five-year contract ended. “It was always clear that he was hired as a turnround CEO who does the restructuring work,” a person familiar with Mr Achleitner’s thoughts said. The fact that Mr Cryan single-handedly kicked off the succession debate before the bank’s problems were fixed puzzled the chairman. 

The relationship took another hit in December, when Mr Cryan surprised the chairman with a last-minute call to top up the bonus pool by an additional €1bn. The admission that the bank would miss its 2018 cost-cutting target by the same amount, and the worse-than-expected performance of the investment bank, contributed to Mr Achleitner losing faith in Mr Cryan’s ability to deliver. 

The 60 per cent fall in the share price over the three years of his reign, and his habit of voicing snarky public remarks about the lender’s overstaffed operations, also helped weaken his position.

Yet some observers point out that the ousted CEO deserves credit. “He has actually done some of the hard work,” said Kian Abouhossein of JPMorgan, adding that he has reduced costs, introduced IT process, and delivered “improvements which we right now probably don’t see, yet will become visible over several years”.

Settling most of the bank’s legal legacy issues, raising more than €8bn in fresh equity and successfully listing a minority stake in Deutsche’s asset manager DWS in a choppy market environment are also among Mr Cryan’s achievements. 

Now Mr Sewing has the responsibility of turning round the bank’s fortunes — but observers say merely executing his predecessor’s strategy would be an unwelcome move.

“The big question is if Mr Sewing has a mandate from the supervisory board to extremely trim or sell the investment bank,” said a senior banker at a rival Frankfurt lender. “Just doing the same as previous management, but better, looks like an unpalatable option.

Additional reporting by Martin Arnold, Laura Noonan and Patrick Jenkins 

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