Give Deutsche Bank AG CEO More Time, Fund Manager Serra Says at Davos

By Jenny StrasburgFeaturesDow Jones Newswires

DAVOS, Switzerland--Deutsche Bank AG and its Chief Executive Officer John Cryan need another two to three years to show the progress promised as part of the German lender's long-term turnaround, said Davide Serra, who runs London-based fund manager Algebris Investments, at the World Economic Forum in Davos, Switzerland.

It's unrealistic to expect Mr. Cryan to have reoriented Deutsche Bank after years of high-leverage trading strategies that aren't possible or don't pay off the way they used to, particularly in low-volatility, low-interest-rate markets, said Mr. Serra, whose firm oversees about $14 billion in assets and has invested in Deutsche Bank so-called AT1 securities.

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With rising interest rates, Deutsche Bank could make 6% to 7% return on equity in its core businesses within two to three years, Mr. Serra said. That prospect hasn't yet been factored into investor expectations, but the bank is making the right moves to achieve that return and eventually cover its cost of capital, he said.

Write to Jenny Strasburg at jenny.strasburg@wsj.com

(END) Dow Jones Newswires

January 23, 2018 05:37 ET (10:37 GMT)