Hard questions loom for the new bosses of Germany’s national banking champion
IN THE entrance to Deutsche Bank’s London office is a giant silver ball with a hole in the middle that offers an inverted reflection of the viewer and bank. The sculpture, which is called “Turning the World Upside Down III”, is a fitting metaphor for the changes sweeping the banking industry. Deutsche itself has had a good crisis, eschewing direct help from the German government and rebuilding its balance-sheet to regain its place as the biggest bank in Europe by total assets. Yet its world is turning upside down, too.
The most obvious upheaval is in the executive suite. On June 1st two new co-chief executives, Jürgen Fitschen and Anshu Jain, will take over from Josef Ackermann, who has run the bank for a decade. Mr Fitschen, the boss of Deutsche’s German operations, is a far less controversial figure than Mr Jain, an Indian-born, American-educated British citizen who has propelled Deutsche’s rise in investment banking. Mr Jain’s elevation is a remarkable one in a corporate culture as crusty as Germany’s: most bosses are either German or native German-speakers from Switzerland or Austria. His appointment has also provoked a backlash from an “old guard” within Deutsche who fear the growing influence of the investment bank, which is based almost entirely in London and is staffed largely by non-Germans.
Yet the focus on Mr Jain is a distraction. The bank’s biggest task is not to convince investors that it has the right executives in place—big investors and fund mangers see the new team as more shareholder-friendly than the old one. It is to prove that it has enough capital and liquidity to satisfy regulators and that it can adapt its business model to a topsy-turvy landscape.
Start with capital. Deutsche has total assets of close to 1.2 trillion euros ( $1.7 trillion),and total equity of 56 billion euros. In terms of simple leverage, the bank has just 1 euro in equity backing every 38 euros of assets.