John Cryan takes over as Deutsche Bank’s CEO
Deutsche Bank announced that John Cryan will take over as its new CEO. Cryan was formerly the CFO at UBS and has served on Deutsche's Supervisory Board since 2013. Anshu Jain will continue to act as the interim CEO till June end and will stay on as a consultant till January 2016, while his co-CEO Juergen Fitschen will exit on 19 May 2016.
In 2007, Barclays alerted the US regulators about the low interbank rates (LIBOR) being submitted by banks which started the investigation. In August 2012, a joint New York-Connecticut investigation of 7 banks found libor anomalies. Later, the regulators released a cache of emails, electronic messages and phone calls showing the attempts to move the rate used to price £3.5 Tn of financial contracts.
London Interbank Offer Rate (Libor) is the average interest rate calculated through the submitted interest rates by major banks for internal borrowing.
A record fine of $2.5 billion was levied on DB for rigging Libor. The bank has also been directed to fire 7 employees: 1 managing director, 4 directors and 1 vice-president, all based in London, together with 1 Frankfurt-based vice-president for being obstructive in the investigations. The total of $2.5bn includes $600 Mn to NYDFS, $800 Mn to CFTC and $775 Mn to DoJ.
As if the $ 2.5 Bn fine was not enough, Deutsche Bank paid $925 Mn to Leo Kirch to end a long-running dispute with the media mogul.
Deutsche Bank announced the closure of almost 200 of its 700 branches by 2017 in Germany to cutback costs. The bank has also decided to cut down the operational costs by 3.5 billion euros ($3.8 billion) by 2020. 200 billion euros ($217.5 billion) will be slashed in investment bank assets along with a reduced number of countries of operations.
The high fine led to extreme cost cutting of over $50 billion, which triggered a voter revolt. In its annual meeting on 21 May 2015, Deutsche Bank shareholders doled out a vociferous vote of disapproval. 39% of investors refused to support the executive performances. The investors showed their disapproval with Deutsche's profit growth, alarming regulatory fines and the plans to restructure the bank.
Deutsche Bank's former co-CEO Anshu Jain's decision was due to the criticism in media and from labor unions in Germany over the cutbacks and the decision to close several branches. Moreover, only 61% of shareholders showed faith in the bank's strategic plan. This has been a record-low approval in the history of Deutsche Bank annual meetings.
