Deutsche Bank's struggle to break with the past and achieve a "cultural transformation" has suffered another setback after co-CEO Juergen Fitschen was implicated in a criminal investigation.
The bank set out an ambitious agenda last year to create a leaner, safer lender - exiting risky business lines, abandoning proprietary trading and implementing a "red card" system for staff meant to raise the standard for behaviour.
But the list of costly scandals and legal complications keeps getting longer with Fitschen, a principal architect of Deutsche's makeover, named on Monday as a suspect in a investigation into falsifying evidence.
"This shakes the very foundations of trust in the bank," said one Germany-based shareholder.
EU antitrust regulators landed a fresh blow when they included Deutsche on a list of big banks to be fined multi-million euro sums for suspected rigging of benchmark interest rates, a source told Reuters on Tuesday.
Deutsche Bank stands by Fitschen, whose contract was extended until 2017 only last week, saying it was "absolutely convinced" that he would be cleared in the latest investigation.
Munich prosecutors seek to determine whether Fitschen gave misleading evidence in a decade-old civil suit brought by the heirs of late media mogul Leo Kirch, who accuse the bank of undermining the business.
The bank set aside 1.2 billion euros for potential legal charges in the third quarter, wiping out profit and raising the total amount of legal reserves to 4.1 billion euros.
"Only something greater than 6 billion euros will take the bank to the safe side," the shareholder said.
The list of complications keeps lengthening and includes a probe into whether its traders helped rig reference interest rates including Libor.
Fitschen and fellow co-CEO Anshu Jain proposed sweeping reforms last year designed to set behavioural benchmarks for staff and management, saying that a cultural transformation was needed to get the bank back on a solid, sustainable footing.
"The sins of the past, of which there were many, are still being uncovered and retribution exacted," said a chief investment officer at one of Deutsche Bank's 30 largest shareholders.
Source: Reuters
