Earlier this week, Deutsche Bank Chairman Paul Achleitner dismissed CEO John Cryan after what many criticised Cryan’s inability to decide what direction to take in job and cost cuts. This concern, coupled with the insurmountable pressure on the Deutsche Bank group as share prices toppled, has resulted in heavy losses.
In hopes of improvements and growth, Achleitner appointed a new CEO, Christian Sewing. Sewing is expected to brief management of his upcoming plans to speed up the processes needed to make a change.
Many believe that Achleitner had been prepared for Cryan’s dismissal for months before. Achleitner had forewarned some investors, but it still took many major shareholders by surprise, as well as some Deutsche Bank’s executives.
Despite Achleitner’s preparation, having rushed the CEO replacement, many concerns and criticisms arose regarding his ability to lead a bank, more importantly, a bank that has been the flagship of Europe’s economy.
Amongst these criticisms is that Achleitner did not provide a structured strategy for the bank to follow - as Hendrik Leber, a shareholder’s (Acatis Fondsmanager) fund manager claimed. Ideally, providing a bulletproof strategy for the CEO to employ is the most important role of a chairman.
Hans-Christoph Hirt of Hermes EOS, a firm which represents pension funds and other investor types, questioned the appointment of a new CEO at such a crucial stage of the company’s turnaround. Additionally, Hirt claimed that Achleitner had overseen certain significant strategies which could have assisted this turnaround.
Overall, many are doubting Achleitner’s approach to getting the bank out of hot waters. His apparent lack in strategy concerns shareholders and executives of Deutsche Bank.
These events beg the question of how involved are the appropriate committees in the process of selecting a new CEO and establishing a sound strategy? This is a lesson for all banks around the world that all solutions and problems start and end with governance. Good governance dictates sound strategy and the involvement of all committees and departments in the appropriate processes.