London - It says a lot about the way the world's financial community thinks that the resignations of Deutsche Bank's co-chief executives on Sunday seemed to come as a surprise.
This was because the starry Anshu Jain had only recently been confirmed as the bank's de facto monarch, having been handed the responsibility to oversee the implementation of its new strategy.
The shake up left his co-chief executive Jürgen Fitschen in the position of consort, there to reassure the in-laws that they still had one of their own at the top.
In reality, however, the only real surprise was that it took this long. The numbers said they won the vote on the “discharge” of their responsibilities at the bank's AGM last month but nearly 40 percent of shareholders voted against them.
Jain was the lightning rod for investors' discontent. So his being charged with implementing a new strategy was scarcely tenable and he appears to have sensibly decided to cut his losses, with Fitschen due to follow next year.
Their successor, John Cryan, was heading the audit committee as a member of the supervisory board before his elevation. Like Jain, he is British, but by contrast to the latter, he does at least speak functional German. More importantly, he seems to have the unequivocal backing of investors, no bad thing given that he might have to tread on more than a few toes to get Deutsche back in shape.
He needs to be sure none of those belong to regulators. Much has been made of Deutsche's strategic woes and its lacklustre financial performance. Its investors hope the ruthless Cryan can fix those issues.
Just as important, however, will be fixing a once prestigious bank's reputation, which has taken a series of body blows, many due to the activities of its London-based investment banking unit that was Jain's baby.
The bank said he was cleared of any wrongdoing, but the verdict of the Financial Conduct Authority was devastating. Not only did the watchdog hit the bank with its biggest penalty over Libor, it also attacked Deutsche for misleading it and operating a culture of generating profits without regard to the integrity of the market.
Yesterday I reported that the Lord Mayor of London, Alan Yarrow, would like to see banks given a seat at the table when it comes to regulatory reform. It is behaviour like that at Deutsche which is preventing that. Shareholders have given Cryan a ringing endorsement. To keep them on side, returns must flow. But he also needs to ensure they are generated in the right way.
The Independent