Deutsche Bank

Deutsche Bank CEOs Jürgen Fitschen and Anshu Jain promised to mend their ways: "We will do what we can to clear up the past," they told the bank's employees at the start of the year. They promised that there would be a cultural change at Germany's largest bank, but it would take time. For now, though, change could find itself mired in quarterly earnings which were showing a loss - and which were a legacy of the time before they took over from Josef Ackermann in May.

Complaint about police raid

So far the bank's CEOs have not put on a good show: there was certainly no sign of any cultural change in mid-December, when they had been in office for half a year. Instead, federal police surrounded the bank's Twin Towers headquarters in Frankfurt as law officers, some of them armed, swarmed through the building in connection with investigations of employees and customers charged with suspected tax evasion, money laundering and attempted obstruction of justice in the trading of carbon emission certificates. Frankfurt prosecutor Günter Wittig said the defendants were accused of hiding and destroying evidence supporting the charges.

Jürgen Fitschen complained to the state premier of Hesse about the raid - and was handed a lukewarm apology that was later taken back. What remained was the impression that the bank saw itself as being above the law. That didn't look like cultural change.

But Fitschen is adamant that that is what he wants. "Banks must return to the center of society," he announced at the presentation of Deutsche Bank's new "2015 plus" strategy last year. Banks "must not become a marginal phenomenon people would prefer to avoid if they didn't need them so desperately," he said. According to the Deutsche Bank CEO, banks are by nature mediators between depositors and creditors. The bank knows its business - a message that is part of Deutsche Bank culture, he said. Another aspect was "that we handle our business in a manner characterized by trust."

These are lofty claims indeed that are put to the test again and again. The bank must get rid of risky assets worth about 122 billion euros ($165.3 billion) which it has deposited in an internal "bad bank" and is slowly selling. It is a gradual process. Hedge funds and investors on the unregulated capitals market take over the risks - a factor Elke König, the head of Germany's Bafin financial watchdog, disapproves of. "We do not stand to win much if we support evasive actions that takes us into markets that are weak or not regulated at all," she said.

Never planned a revolution

What's done is what the market allows. But does that leave any room for the promised new culture? Supposedly, the lure of making fast money with enormous risks has been eliminated from the bank's staff payments system. But a bank is a bank, after all. Fitschen's co-CEO Anshu Jain never saw the need to turn the bank inside out. "We did not feel the bank needed a revolution," he said last year.

It was Jain who built up Deutsche Bank's highly criticized, risky investment banking strategy in London, and he's not expected to abandon it.

A new culture is unlikely to be in evidence when Fitschen and Jain present fourth quarter results - and thus the results for the whole of 2012 - on Thursday (31.01.2013). The legacy is just too heavy a burden, says Stefan Bongardt, an analyst with Independent Research, with problems resulting from the internal "bad bank" as well as penalties for the manipulation of the internationally important Libor and Euribor interbank rates and compensation in connection with the collapse of the Kirch media group. "If things are really bad, a negative fourth quarter result is perfectly possible," Bongardt predicted.

Shareholders may find comfort in the fact that much of the bank's negative legacy is non-recurring and does not stem from a faulty structure. That's what the bank has been saying, both before and during the financial crisis. But now financial regulators are investigating the bank for alleged manipulation of the Libor and Euribor rates. The German state of Saxony, Bavarian and Baden-Württemberg state lenders and other banks are taking Deutsche Bank to court for allegedly deceiving them about "toxic" assets they were sold.

There's not much chance of a new culture in a bank that says it does not want a revolution.