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Christian Sewing to become new CEO of Deutsche Bank

  • Christian Sewing is to become the new CEO of Deutsche Bank, replacing John Cryan, a person familiar with the matter told Reuters on Sunday.
  • Sewing is currently co-deputy chief executive officer of the German lender.
  • Marcus Schenck, currently Sewing's fellow co-deputy CEO who also helps oversee the investment bank, is close to leaving the bank, said the person familiar with the matter.
  • Deutsche Bank has been struggling to turn a profit under Cryan's tenure.
Christian Sewing, management board member of Deutsche Bank AG, looks on during
Krisztian Bocsi | Bloomberg | Getty Images
Christian Sewing, management board member of Deutsche Bank AG, looks on during

Christian Sewing, currently co-deputy chief executive officer of Deutsche Bank, is to become the new CEO of Germany's biggest lender, replacing John Cryan, a person familiar with the matter told Reuters on Sunday.

Sewing, a German national, would replace Cryan, a Briton, at a time when the bank is trying to strengthen its brand in its home market. Cryan has been in office less than three years but investors have lost faith that he can return the bank to profitability after three consecutive years of losses.

The promotion of Sewing, 47, with a background in commercial banking, auditing and risk, comes as Deutsche Bank and its major shareholders debate the path forward for the investment banking unit where revenues have dried up and key staff defected.

His appointment could signal a shift in emphasis away from Deutsche Bank's strategy of seeking profit growth through the investment bank and giving investment bankers greater influence.

Marcus Schenck, currently Sewing's fellow co-deputy CEO who also helps oversee the investment bank, is close to leaving the bank, said the person familiar with the matter.

Sewing tops a list of candidates as the preferred option to be presented by Chairman Paul Achleitner at a hastily arranged board call on Sunday evening, the source familiar with the matter said.

Sewing would assume the helm at the company's annual general meeting in May, German magazine Der Spiegel said on its website. Der Spiegel was first to report on Sunday that Sewing would likely become the bank's next CEO.

Deutsche Bank said late on Saturday that the board would discuss the CEO position and make a decision.

A spokeswoman for Deutsche Bank declined to comment.

Blow to Schenck

In picking up the baton, Sewing would also face challenges including further cost cutting, intense competition at home and abroad, and increased regulation.

Sewing, a member of the management board since 2015, currently oversees the bank's private and commercial bank division, which includes the Postbank retail banking unit.

He joined Deutsche Bank in 1989 and has worked in Frankfurt, London, Singapore, Tokyo and Toronto, according to the bank's website.

Sewing's appointment would be a blow to Schenck, a former Goldman Sachs (GS.N) investment banker long considered a future CEO at Deutsche.

Schenck had signaled he was looking for opportunities outside the bank. Garth Ritchie would stay on as sole head of the investment bank, said the person familiar with the matter.

Sunday's board call will follow two weeks of turmoil over the bank's leadership.

Achleitner had initiated a search to replace Cryan, two people familiar with the matter told Reuters on March 27, following a flurry of negative headlines after the bank reported a third consecutive annual loss.

Cryan responded by writing a memo to staff in which he said he remained "absolutely committed" to the bank. But Achleitner stayed silent, to the disappointment of major investors seeking clarity. Sunday's board call is intended to provide that clarity.

The leadership debate underscores the continued fragility of the 148-year-old bank after speculation of a possible government bailout just over a year ago.

'Dysfunctional Company'

The debate also parallels concern about the direction of Deutsche's investment bank, whose swift expansion in the years leading up to the financial crisis is blamed for many of the bank's current woes.

Revenue at the investment bank in 2017 was down 25 percent compared with 2015, a steeper fall than those suffered by its competitors. The division employed more than 41,000 staff at the end of 2017, up 4 percent from 2015, but key staff have left.

The bank is conducting a global review of the investment bank, known internally as Project Colombo, a person with direct knowledge of the matter has said.

Cryan, the son of a jazz musician, is married into the wealthy Du Pont family of the United States. He was appointed to the helm of Deutsche in 2015 to overhaul the bank after years of rapid growth under investment bankers.

But his tumultuous tenure as CEO highlights many of the bank's underlying issues.

Early on, Cryan quickly announced thousands of job cuts to trim costs but reversed the bank's plans to sell its Postbank retail unit after tepid interest from buyers.

Meanwhile, the bank announced earlier this year that it would report its third consecutive annual loss for 2017.

The German government and some of the nation's most senior politicians criticized Cryan for paying 2.3 billion euros ($2.8 billion) in staff bonuses despite those losses, four times higher than the previous year.

One board member, Kim Hammonds, told leadership at a recent meeting that the bank was "the most dysfunctional company" she had ever worked for, according to a person with direct knowledge of the matter.

Over the past weeks, a number of names have surfaced in the media as possible replacements for Cryan. But some analysts wonder whether anyone would be able to do a better job on turning the bank around.

"There has been actually a disciplined execution in a tough environment by this team," said Peter Nerby, who analyses the bank for Moody's. "I wonder if anyone really has a better way to get there. It's not obvious to me what that way would be."