Deutsche Bank's CEO says the bank is 'absolutely rock-solid' in memo to employees

Deutsche Bank is "absolutely rock-solid," according to co-CEO John Cryan.

In a memo to employees sent out Tuesday, Cryan sought to re-assure the staff of Germany's largest bank - and presumably markets as well - that things are going just fine and that current market prices indicating stress at the bank are mis-reading the situation.

"Volatility in the fourth quarter impacted the earnings of most major banks, especially those in Europe, and clients may ask you about how the market-wide volatility is impacting Deutsche Bank," Cryan wrote.

Adding: "You can tell them that Deutsche Bank remains absolutely rock-solid, given our strong capital and risk position. On Monday, we took advantage of this strength to reassure the market of our capacity and commitment to pay coupons to investors who hold our Additional Tier 1 capital. This type of instrument has been the subject of recent market concern."

Here Cryan is referring to Deutsche Bank's CoCo debt - which we wrote about a bit here - which is effectively a junior bond the market is worried will be written down by the bank or, as is possible under the terms of these instruments, be converted to equity.

On Monday Deutsche Bank issued a statement saying that it had enough capital to make the coupon payment due to CoCo holders in April.

Though as we noted on Monday, the first rule of Additional Tier 1 payment capacities is that you don't talk about Additional Tier 1 payment capacities.

In the fourth quarter Deutsche Bank posted a loss of over $7 billion and currently its stock is trading near a record low. Cryan also hosted a nearly three-hour conference call following these results in which he said, among other things, that he'd like to run a bank more like Wells Fargo than his own (meaning a staid retail bank would be more fun right now: who could blame him?)

But as Bloomberg's Tom Keene noted on Tuesday, this type of memo with these types of headlines crossing the tape is truly "stunning" as banking, at its heart, is a confidence-based business and part of projecting confidence involves not having to project confidence.

And so when the most important bank in Europe's most important economy comes out and says everything is fine, it's hard to imagine the message really being taken that way.

Deutsche Bank shares trading in New York fell 7% on Monday and shares were down another 1.7% in pre-market trading on Tuesday.

Here's the full memo:

Dear Colleagues,

When I first became your colleague and Co-CEO seven months ago, I promised to increase communication from the Management Board to you. I made clear that when we had something to communicate, I wanted you to hear about it first from us. That is why I am writing to you today.

Last week, at one of our scheduled off-sites, the Management Board talked about progress on our strategy, and how recent market volatility and forecasts for slowing economic growth might impact our clients and us. Volatility in the fourth quarter impacted the earnings of most major banks, especially those in Europe, and clients may ask you about how the market-wide volatility is impacting Deutsche Bank.

You can tell them that Deutsche Bank remains absolutely rock-solid, given our strong capital and risk position. On Monday, we took advantage of this strength to reassure the market of our capacity and commitment to pay coupons to investors who hold our Additional Tier 1 capital. This type of instrument has been the subject of recent market concern.

The market also expressed some concern about the adequacy of our legal provisions but I don't share that concern. We will almost certainly have to add to our legal provisions this year but this is already accounted for in our financial plan.

The Management Board also discussed its vision for the bank. For us, a vision defines our aspiration for the bank, and what we want it to be. It's important because it creates clarity of purpose and unites all of us in achieving common and worthy goals.

Our vision is to be a trusted and successful bank. We aim to deliver financial solutions, technology, products and services that exceed our clients' expectations. We want to be the most respected financial services provider across all customer segments in Germany, our vital and strong home market; the number one bank for our corporate, institutional and fiduciary clients in Europe; and the best foreign bank in the United States and Asia.

We are achieving our vision in a number of ways, including:

First, we are investing in hiring more people in Equity Sales and Research to serve our clients' needs and to regain our leadership in the equities markets.

Second, we are investing in bringing on board some talented senior bankers into Corporate & Investment Banking.

Third, we are investing in client-facing technology, particularly in our retail banking and asset management businesses.

Finally, I am personally investing time to resolve successfully and speedily open regulatory and legal cases. I want to remove the uncertainty among staff and in the market that these cases cause. A small group of senior people, led by me, will focus on this. For everyone else, we ask you to continue to focus on our clients and on the implementation of our strategy.

In the weeks ahead, my colleagues on the Management Board will update you on a number of topics, including customer focus, the work we're doing on costs, and our priorities for developing employees. We want to make transparent where we are in our strategic efforts. This will add to accountability and help track progress.

We want to hear from you too. What are clients telling you? How do you think we should build a better Deutsche Bank? As ever, please contact me directly via the feedback tool on our intranet.

On behalf of the entire Management Board, thank you for your ongoing hard work. Let's all work together to support this vision.

Yours sincerely,

John Cryan