Deutsche Bank's decision to choose company veterans as its new leaders is in danger of backfiring, as their attempts to change a culture of aggressive profit-chasing are undermined by questions about their own roles in the bank's troubled past.
Anshu Jain and Juergen Fitschen took the reins as co-chief executives of Germany's biggest bank in June, under pressure from politicians, regulators and investors to deliver wholesale reform in the wake of the 2007-09 financial crisis.
But with more than 40 years at the bank between them, the pair are finding themselves drawn into a series of investigations into the bank's suspected misdeeds during the boom years.
Most damagingly, Fitschen himself is now under investigation after the bank faced the ignominy of an army of 500 police and prosecutors raiding its twin-tower Frankfurt headquarters and other premises last week as part of probe into a carbon trading scandal.
"You can deliver cultural change if you become a symbol for progress, but only if you are not contaminated. This is a difficult situation for Deutsche," said Wolfgang Gerke, professor of banking at the Bavarian Financial Centre.
Deutsche said that so far nobody had been charged with any offences in the wake of the tax raids related to carbon certificate trading, adding it was cooperating with authorities.
It declined to make Jain and Fitschen available for comment but referred to an interview given by Fitschen in the past week in which he said recent events had only hardened his conviction that efforts to reform banking culture must be continued.
It is not just Fitschen who is feeling the heat.
Deutsche is still being probed about its role in a global interest rate fixing scandal and faces allegations of false accounting during the financial crisis, as well as lawsuits tied to the way it sold subprime assets to investors.
Many of the investigations centre on the group's investment bank, formerly headed by Jain.
"It feels like you can't get on with the day job anymore, we're too busy putting out fires," said a senior Deutsche executive, who declined to be named.
Hans-Peter Burghof, a professor of banking at the University of Hohenheim in Stuttgart, said appointing company veterans brought advantages in terms of continuity, but also risks.
"They didn't come from nowhere, which means they can't symbolize a fresh start without baggage. They have massive baggage in the form of their past."
On Friday, Fitschen assembled stunned staff at the bank's headquarters following the bruising raids by police which included a search of his offices, two sources told Reuters.
The bank was innocent until proven guilty, he told employees, adding: "You can still be proud to work here."
Deutsche had hoped the appointment of Jain and Fitschen would bring stability and allow it to use its size and financial strength to gain market share while smaller rivals pull back.
The bank had come through the global financial crisis without requiring a state bailout and radically pared back the scale of its bets and closed its proprietary trading desk. The overhaul has also changed the way the bank awards bonuses, deferring payouts in a bid to make profits more sustainable.
But with an election less than a year away, politicians in Berlin have seized on the probe into possible money laundering and obstruction of justice related to a carbon trading scheme as evidence that something is still rotten at Deutsche.
On Monday, politicians from across the political spectrum criticised Fitschen for calling a regional state premier to complain about the heavy-handed nature of the raids on the bank's headquarters.
Last month several politicians also accused Jain of "chickening out" after the bank decided not to send him to a parliamentary hearing on the manipulation of benchmark Libor interest rates.
In June, Deutsche had tried to placate politicians by emphasising a more conservative approach in investment banking. Days after formally taking office, Jain travelled to Berlin to deliver a keynote speech in front of clients and politicians, including finance minister Wolfgang Schaeuble.
"The contract between banks and society was broken during the crisis," Jain said at the time. "Banks are now viewed with suspicion. That's understandable. We have to work harder to prove our activities are safe. Put simply, we have fallen from grace. We must restore your trust in us.
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