Doubts about Deutsche

Thursday's confirmation that Deutsche Bank had logged an unprecedented annual loss of 6.7 billion euros ($7.3 billion) didn't come as much of a surprise. The markets had been expecting a so-called "profit warning." And John Cryan, the bank's co-CEO, has been saying since last autumn that it would take a miracle for the lender to book a better full-year result.

But no one expected it to be this bad. After all, last year Deutsche was in the black by 1.7 billion euros.

Weak core business

All in all, Deutsche has had to write off about 6.8 billion euros - 6.7 billion plus an additional 100 million. Most worrying of all: The bank can no longer rely on its core investment business. That sector accounted for a loss of 1.2 billion euros in 2015. Or as Cryan put it, "In the fourth quarter, our trading business lost a bit of its momentum."

Indeed, it was a conscious decision to pull out of some of the bank's most capital-intensive (and risk-intensive) areas of business. Its operations with interest rates and currencies are doing just fine. But the bank did "lose ground in the equity market," Cryan said. "We are committed to invest in our employees in Research and Sales in order to win back market share."

The bank needs money

But that won't really solve Deutsche's primary problem: Germany's leading lender is losing market share every day compared to its largest competitors, most of which are based in the United States.

Deutsche must urgently boost its earnings in order to pay for the wave of litigation it has been putting off for so long. Since 2012, the bank has had to pay 12.7 billion euros in settlements and penalties - 5.2 billion euros in the last year alone. Cryan didn't want to reveal any figures for litigation in the current year, but he's hoping that they will be less than in 2015.

In addition, the restructuring that Cryan and the other board members have promised is sure to carry a hefty price tag. Around 1 billion euros have been allocated so far for severance pay and other such expenses. Then there's the modernization of the bank's computer systems, which are primitive at best. The number of operating systems, for instance, is set to be reduced from 45 to four by 2020. According to current estimates, this change alone is going to cost 800 million euros.

The domestic market

Cryan and his outgoing co-CEO, Jürgen Fitschen, have been at pains to exude a sense of optimism. Fitschen, who will relinquish his position this summer, has been emphasizing the importance of Deutsche Bank's connection to its domestic market, Germany. The bank wants to continue to be available for entrepreneurs and businesses, even startups. The image that Fitschen wants Deutsche to have when he leaves is of the good ol' neighborhood bank.

Cryan described what has been done since summer - when he took over the job - to get the company back on track. Business divisions have been restructured. Special decision-making bodies operating outside of the board have been dismantled. The sale of problematic investments in the Chinese Hua Xia bank is practically a done deal.

Progress has been made towards the planned sale of Postbank, though CFO Marcus Schenck admitted it could stall in light of the current market environment. Cryan says that the large-scale restructuring will require "time, determination and patience." But time is a scarce resource - as he spoke during the press conference, stocks slid further, nearing a seven-year low.

"An ice-cold reformer"

Cryan laughed when asked whether he had a vision for the bank, or if he was just there to clean up. He said he had recently read a headline that billed him as an "ice-cold reformer," which also translates in German as "ice-cold cleaner." Cryan said he hoped his wife hadn't read the same headline. He added that he also hopes he has "a bit of talent in running a company."

These days, with billion-dollar losses and thousands of layoffs, he said it isn't always easy to go to work in the morning in a good mood. But he does see a "light at the end of the tunnel," and he often hears from customers how much the bank still means to them.

At the same time, he is aware of how hard it will be to win back the trust of the bank's shareholders. There will not be a dividend again until 2017 at the earliest. But maybe the bank will be able to get itself back in the black in 2016. For that to happen, however, there would have to be further belt-tightening, as the necessary investments would be financed by savings elsewhere. One step has already been taken: The board, Cryan and Fitschen included, will not receive a bonus for the last fiscal year.