Deutsche Bank: Why the dual-CEO system failed

Anshu Jain

Deutsche Bank's co-CEOs may have handed in their resignations, but challenges remain for the new head of the company.

After three years of struggling to restructure Deutsche Bank , and convince shareholders, analysts and even employees of their new strategy, Anshu Jain and Jürgen Fitschen handed in their resignations Sunday.

The double-CEO arrangement will be scrapped and taking the duo's place will be John Cryan, member of the bank's supervisory board and former CFO at UBS, who will share the job with Fitschen until spring next year and then head the bank solo.

Following Sunday's announcement, Deutsche Bank shares soared 7.9 percent at the open of trade in Frankfurt on Monday.

"You're going to have a lot of talking heads today speculating on what is going on. I think there are two or three lessons here - not knowing the nuances here is number one," John Studzinski, vice chairman at Blackstone Group told CNBC Europe's "Squawk Box."

"In any industry, co-head management models are incredibly challenged and often don't work. When you add the layer that this is financial services, the regulatory scrutiny, this is difficult here.".

Analysts at Credit Suisse, led by Mohamed Souidi, said the appointment of a single CEO marked a "significant change" from a corporate governance standpoint, following criticism of the co-CEO structure.

"Whilst the co-CEOs were under significant pressure following a disappointing strategy update and challenged by a portion of shareholders at the last AGM, the timing of this announcement is a surprise (only 6 weeks after the strategy update)," they said in a note Monday.

"With the personality of the new CEO being highly regarded by the market, we think this announcement could re-open the strategic debate."

The double-CEO structure seemed like a great idea at the time: back in 2011 the bank thought it the best way to alleviate concerns surrounding placing investment banker Jain at the top. Fitschen would be the CO-CEO dedicated for the German market.

Jain's personality, and above all his career as an investment banker, was always going to raise fears and criticisms in Europe's biggest economy -- even more so in the aftermath of the financial crisis.

This in the end, and the question of what Jain knew about all Deutsche Bank's past wrongdoings when he was head of their investment bank, was too much to get through. According to people familiar with the matter, he resigned not to be in the way of the bank going forward.

Read More Deutsche Bank's co-CEOs set to depart the bank

The men will be gone but the challenges will remain for the new one.

Low profitability in its retail banking division, a huge investment bank and overrunning costs will be the "signing bonus" for Cryan who is regarded in the market as "underpromising to overdeliver."

Cryan, who joined the supervisory board in 2013 and since then was touted as being the "back-up solution" for the top job, is also no stranger to the new strategy.

He is said to stick to the new strategy which was unveiled late April but has considerable leeway in adjusting the details. The bank has promised to deliver on more detail of their strategy as soon as next month.

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