Deutsche Bank Co-CEOs Jain and Fitschen Resign
The embattled co-chief executives of Deutsche Bank AG announced their resignations on Sunday, an abrupt move that throws into question the future direction of one of the world’s largest banks.
The joint resignations follow a series of financial missteps and regulatory penalties at the giant Frankfurt-headquartered bank. In recent weeks, the pressure has intensified, with an increasing number of shareholders and employees losing confidence in the bank’s performance and the management team’s turnaround plans. . . .
Mr. Jain’s decision was driven largely by criticism from labor unions and media in Germany over the bank’s decision to cut thousands of jobs and close many branches, one person said. Mr. Jain felt his inability to speak fluent German, a barrier to engaging shareholders at the bank’s annual meeting, was a major obstacle. He viewed himself as a lightning rod to critics and, increasingly, a distraction that interfered with the bank’s ability to thrive.
Adding to the pressure on the co-CEOs, Mr. Fitschen, 66 years old, is on trial in Germany in connection with the collapse of the Kirch media empire in 2002. He is accused of giving false testimony in a long-running legal battle with heirs of the late media mogul Leo Kirch. Mr. Fitschen has denied the charges. . . .
The bank repeatedly fell short of its own and Wall Street’s profit forecasts. The executives said the bank had plenty of capital, only to do an about-face and go to shareholders for more funds, first in 2013 and then again last year. In April, the bank was forced to pay about $2.5 billion and to plead guilty to resolve accusations that its traders tried to rig benchmark interest rates, including the London interbank offered rate, or Libor; regulators blasted the bank for misplacing or destroying evidence and not cooperating sufficiently with investigators.
In late May, the U.S. Securities and Exchange Commission fined Deutsche Bank $55 million for essentially hiding losses during the financial crisis. And the bank in recent weeks has said it was investigating allegations that its Russian unit was involved in money laundering, a revelation that knocked the bank’s stock price last week. Mr. Jain was also rocked by the suicide in January 2014 of one of his long-serving deputies. . . .
Among the warning signs for Mr. Jain was an open letter sent to Deutsche Bank employees last month. Titled “Wind of Change? Wind of Jain,” the letter from labor-union representatives demanded Mr. Jain’s ouster. In an indication of eroding support for management, the letter resonated not just with rank-and-file employees who opposed the planned layoffs and branch closures, but also with some senior executives, said people familiar with the matter. . . .
Now that Mr. Jain has been thoroughly discredited by Deutsche Bank, let’s see what finally happens to him. Go on to The Aftermath III.