The chief executive of Deutsche Bank has reassured staff that the bank is strong in the face of ongoing market turbulence.
John Cryan, appointed to run Germany’s biggest bank seven months ago, sent an email to its 100,000 staff to assure them the bank was “absolutely rock solid”. It follows the bank’s buffeting on Monday, when its shares fell 9.5% and the cost of buying insurance against it defaulting on its debt rose.
After the market closed on Monday, Deutsche issued a statement intended to quash investor concerns that it might not be able to make payments on a special kind of debt that converts into shares during times of crisis.
Cryan’s personal intervention on Tuesday came as Deutsche’s shares continued to slide. The Stoxx 600 Banks index, which tracks financial stocks across Europe, fell 1.7%, adding to a 5.6% decline on Monday. Europe’s bank sector has lost a quarter of its value this year as fears of a global downturn have damaged market valuations.
Overnight, Japan’s Nikkei index suffered its biggest one-day plunge in three years, falling 918 points, leaving it 5.5% down on the day, at 16,085.
Concerns about Deutsche have swirled since the bank last month reported its first full year loss since 2008, amidst a restructuring being led by Cryan and concerns that it could face hefty fines from regulators.
In his email, Cryan said: “Last week, at one of our scheduled off-sites, the management board talked about progress on our strategy, and how recent market volatility and forecasts for slowing economic growth might impact our clients and us. Volatility in the fourth quarter impacted the earnings of most major banks, especially those in Europe, and clients may ask you about how the market-wide volatility is impacting Deutsche Bank”.
“You can tell them that Deutsche Bank remains absolutely rock solid, given our strong capital and risk position. On Monday, we took advantage of this strength to reassure the market of our capacity and commitment to pay coupons to investors who hold our Additional Tier 1 capital. This type of instrument has been the subject of recent market concern,” he said.
He added that the did not share the market’s concern about whether the bank has set aside to cover fines and other legal matters. “We will almost certainly have to add to our legal provisions this year but this is already accounted for in our financial plan,” Cryan said.
The bank incurred €5.2bn (£4bn) of litigation charges in 2015.
Cryan, who is British and spent much of his career at Swiss bank UBS, is attempting to overhaul Deutsche and in his email he set out his strategy for the bank.
“We aim to deliver financial solutions, technology, products and services that exceed our clients’ expectations. We want to be the most respected financial services provider across all customer segments in Germany, our vital and strong home market; the number one bank for our corporate, institutional and fiduciary clients in Europe; and the best foreign bank in the United States and Asia,” the memo said.
Cryan told staff: “We want to hear from you too. What are clients telling you? How do you think we should build a better Deutsche Bank? As ever, please contact me directly via the feedback tool on our intranet”.
This article was written by Jill Treanor, for theguardian.com on Tuesday 9th February 2016 13.17 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010