At approximately 3.50pm on Monday at a building atop the City outpost of London’s Elizabeth line, investors in Deutsche Bank will witness a changing of the guard.
Germany’s largest listed lender will set out a new strategy aimed at lifting profitability after years of radical restructuring and costly legal battles, part of a “deep dive” for investors and analysts it is hosting at its UK headquarters.
Analysts, encouraged by record third-quarter results, believe the lender is finally on track to meet its midterm target of a 10 per cent return on tangible equity by the end of 2025. Its shares, which have almost tripled in value over the past two years, are within touching distance of returning to book value.
The key question is how ambitious the next phase under chief executive Christian Sewing, who has led the bank since 2018, will be.
The new strategy will bear the fingerprints of James von Moltke, the outgoing chief financial officer who has been in post since 2017. But it will fall to his successor, Raja Akram, to execute it.
At 1.10pm von Moltke will lay out the bank’s “path to 2025 delivery”. It will fall to Akram, at 3.50pm, to present the “forward-looking financials”. Sewing will bridge the two.
Akram joined Deutsche in October from Morgan Stanley, where he spent five years as deputy chief financial officer following 14 years at Citigroup.
But despite his role at Monday’s event alongside the bank’s top executives, he will not take his seat on Deutsche’s management board until January. He is expected to assume the finance role later still, ahead of the expiry of von Moltke’s contract in mid-2026.
Former colleagues say his experience at the two Wall Street groups makes him well suited to a bank still trying to shake off a legacy of regulatory and reputational crises.
“Citi went through an enormous amount of challenges and was a few years ahead of Deutsche in really addressing the issues,” said John Gerspach, Citigroup’s former chief financial officer.
Citi faced a string of crises in the wake of the 2008 financial crash: from huge losses on toxic mortgage securities and a $45bn US government bailout to years of regulatory sanctions, fines and restructuring.
It spent much of the following decade deleveraging its balance sheet, selling non-core assets and rebuilding risk and control systems — a process Deutsche has been attempting to emulate under von Moltke, who joined from Citi in 2017.
Von Moltke and Sewing launched the German lender’s most sweeping overhaul in decades in 2019, creating a capital release unit — in effect a bad bank — to wind down €288bn of unwanted assets.
The programme initially envisaged cutting one in five jobs and sharply reducing reliance on investment banking.
Deutsche has since softened both goals. Cost cuts took longer than expected, and investment-banking income had to offset restructuring charges and billions in settlements over mortgage-backed securities, money-laundering lapses, and rate-rigging investigations.
In a sign of its turnaround, last month the bank escaped enhanced scrutiny from a regulator-appointed monitor for the first time in seven years.
Akram, who is in his early 50s, last year described himself as “a person with above-average risk tolerance” in a profile published by the foundation of his alma mater, Texas A&M University.
While that description might once have suited many of Deutsche Bank’s executives, people close to Akram said it referred to his willingness to change course in his career — and to his hobby of riding motorbikes — rather than to taking business risks.
In a sign of commitment to his new job, the designated finance chief has relocated from New York to Frankfurt and is studying for a German motorcycle licence, with plans to buy a BMW bike.
Akram joined Citigroup from Fitch Ratings shortly before the global financial crisis. Ambitious and direct, Akram told Gerspach early on that he wanted to become Citi’s CFO. Gerspach advised him to gain hands-on business experience, prompting a move to Brazil as country controller and later CFO.
“Within a few months he was speaking the language and had really got to grips with the business,” Gerspach said. One of Akram’s tasks there was to help decide the fate of Citi’s struggling consumer business, which the bank ultimately exited in 2016.
At Deutsche, Akram will confront familiar questions over how best to allocate capital and whether to pull back from certain businesses — with Sewing having declared earlier this year that “nothing is off limits.”
During the investor day, analysts expect the bank to set a new profitability target of 12 to 13 per cent return on tangible equity by 2028, up from this year’s 10 per cent, and to cut its cost-income ratio target from 65 per cent to below 60 per cent.
Such targets remain relatively modest compared with some European peers such as BBVA or UniCredit, which are aiming for return on tangible equity of 20 per cent or more.
But to succeed, analysts say the bank must make further progress on cutting staff and branches, while expanding its wealth management business in the traditionally low-margin retail arm, which has also been hampered by IT integration problems.
It also has legal challenges to overcome. The bank has been hit by lawsuits from a group of former employees seeking hundreds of millions of pounds in damages over a scandal that dates back more than a decade.
One top 20 investor said that the outlook for the bank had improved, but they remained cautious.
“The flow of scandals has eased off, but you can never be completely sure with Deutsche Bank,” they said. “I’ve been burned before.”
Deutsche Bank’s investment banking division will have a helping hand from Berlin’s debt-fuelled investment push, with opportunities for advisory work on sovereign bond issuance and corporate restructurings, however.
Germany’s infrastructure drive is also expected to boost demand for loans from companies.
While Akram was at Morgan Stanley, it went from post-crisis stability to one of the best performing banks on Wall Street. People familiar with Akram’s thinking say he sees Deutsche as entering a similar phase now.