By Steve Slater & Sinead Cruise
LONDON (Reuters) – Thousands of jobs cuts, business closures & billions of euros of capital raising are all on the cards as the new bosses of three of Europe's biggest banks respond to pressure to devise new strategies to revive them.
Credit Suisse <CSGN.VX> Chief Executive Tidjane Thiam, Deutsche Bank's <DBKGn.DE> John Cryan & Standard Chartered's <STAN.L> Bill Winters are putting the final touches to their plans, which Thiam & Cryan will unveil next month & Winters is expected to deliver in early December.
p>All have been in charge roughly 100 days – a period when new chief executives typically formulate strategy after meeting investors, regulators, politicians, customers & staff.
Big job cuts loom in a bid to cut costs & improve profitability – their main target.
Cryan is to cut 23,000 staff, or approximately a quarter of headcount, mostly from disposals, financial sources told Reuters earlier this month.
Winters could axe several thousand, sources said, although they said no final decisions had been made & much will depend on disposals. Meanwhile Thiam has said he plans to use his engineering background to take a hard-nosed look at efficiency.
Senior management ranks are moreover being shaken up – Winters has named a new management team & is cutting layers of bureaucracy to simplify & speed up decision-making while Thiam immediately brought in a long-time confidant as his chief of staff & moved a couple more staff.
Santander's chairwoman Ana Botin <SAN.MC> said this week changes she had made in her first 12 months had "laid the foundations for the bank we want for the next 10 years", & said 21 of her top 31 management team are new or have new roles.
Thiam, Cryan & Winters, all in their early 50s, each needs to undo mistakes made by predecessors & shrink their banks to reduce complexity & obtain out of business areas that no longer make money. Other banks, including CEO-less Barclays <BARC.L> & Italy's UniCredit <CRDI.MI>, are moreover going through the process, yet new CEOs are under pressure to come in with a fresh view to take bold action.
"All are high caliber, yet they need to hurry up & make decisions approximately their business & markets while they are still learning a lot approximately them," one senior banker said.
All three CEOs declined requests for interviews. But here is their thinking on key issues, according to public comments & interviews with sources at banks, investors & analysts:
FIRST 100 DAYS…
The three CEOs have all gathered with their boards & senior bankers this month – opting for hotel retreats in Bavaria, Switzerland & Singapore – to discuss plans.
They have made some huge changes in their first two to three months & given broad signals on where their priorities lie in messages to staff & at second-quarter results.
Winters halved his bank's dividend after a slump in second-quarter profits laid bare the scale of the challenge he faces.
Cryan said he planned to stick with "Strategy 2020", which includes reducing the size of the investment bank & selling its Postbank retail bank & cutting other parts of the retail chain. He moreover said there were plenty of businesses that could still be changed "quite significantly".
And all three are expected to cut their investment bank operations, especially fixed income trading.
THE PERSONAL TOUCH
Thiam has impressed with a confident start, analysts said. The multi-linguist has said he would be "ruthlessly selective" approximately what the bank does, driven by adding shareholder value.
Thiam, a former Ivory Coast government minister who previously ran UK insurer Prudential <PRU.L> for six years, wants a capital-light bank & is expected to put more focus on Asia.
"This is a CEO with a track record, a very successful track record at Prudential. Heâ€™s seen as a remarkable asset allocator, particularly in terms of distributing capital towards regions where he sees growth, & reducing capital headed for areas in which he doesnâ€™t see the same growth," said Guy de Blonay, a manager of the Jupiter Global Financial Opportunities Fund. He owns shares in Credit Suisse & was previously an investor in Deutsche Bank & Standard Chartered.
Winters, a dual U.S. & British citizen who ran JPMorgan's <JPM.N> investment bank & was a member of a UK government commission that recommended how banks should be made safer, said Standard Chartered was "a special bank" yet has its problems.
It had been too focused on growth & not on returns for investors. Its risk assessment had been poor & it had been "too slow to take complex decisions, whether on costs, people, or strategy," he told analysts.
Cryan, a former UBS <UBSG.VX> finance director, moreover said complexity & costs were stifling his bank.
"This is the first time ever that you had the feeling that somebody is talking straight," said one person familiar with the bank. "But the problem is he has to deliver soon."
At his first supervisory board meeting as CEO in July in New York he kept quiet & took a lot of notes, yet at this month's meeting in Bavaria he talked a lot & listed all the problems & weak points for the bank – yet without giving his solutions, according to people at the meetings.
Meanwhile all three banks could do with more capital, analysts say. Each has a capital solvency ratio above its regulatory requirements, yet are relatively weak compared with rivals.
They could opt for a major rights issue, a less disruptive smaller fundraising of several billion dollars or try to build equity capital by retaining earnings & cutting assets – less painful yet potentially holding back on any growth plans.
However, depressed share prices at Deutsche Bank & Standard Chartered make a highly dilutive rights issue unlikely, analysts & investors said. Deutsche Bank already raised 8.5 billion euros last year, while Winters might prefer a quick-fire share sale to raise $3 billion, they said.
Thiam is more likely to raise cash swiftly, bankers reckon, & he told staff on his first day the bank needed a strong balance sheet to assist it through rough times.
Credit Suisse's usual equity capital ratio of 10.3 percent of risk-adjusted assets is well below that of arch-rival UBS & investors said raising $6 billion or more should be supported if it is accompanied by a positive growth story when he steps up on Oct. 21.
(With additional reporting by Kathrin Jones in Frankfurt & Joshua Franklin in Zurich; Editing by Greg Mahlich)
Director DealingsBoard & Management ChangesDeutsche BankTidjane ThiamBill WintersCredit SuisseJohn CryanStandard Charteredinvestment bank