FRANKFURT (Reuters) – Deutsche Bank’s chief executive promised shareholders “tough cutbacks” at its underperforming investment bank on Thursday as he battled to convince them he can turn around Germany’s biggest lender, whose shares hit a record low.

Ranked as one of the most important banks in the global financial system, the bank has been plagued by failed regulatory tests, ratings downgrades, multi-billion dollar fines and management upheavals, with investment banking often the culprit.

Although Deutsche Bank posted its first profit in four years in 2018, it faces tough questions over its scrapped merger talks with Commerzbank, with some top shareholders calling for chairman Paul Achleitner to quit.

After years of failing to keep pace with Wall Street’s big hitters such as JP Morgan and Goldman Sachs, Deutsche Bank is being pushed to retreat from riskier investment banking and focus its effort on mainstream markets.

The investment bank generates about half of Deutsche Bank’s revenue but is also considered its Achilles heel, with European regulators fearful that it will fail the next round of stress tests in the United States.

“We will accelerate transformation by rigorously focusing our bank on profitable and growing businesses which are particularly relevant to our clients,” Chief Executive Christian Sewing told Deutsche Bank’s annual shareholder meeting.

“We’re prepared to make tough cutbacks,” he said, without elaborating on where in investment banking the cuts would occur.

Shares in Deutsche Bank, which have lost 38% since last year’s shareholder meeting, were down 2.8% at 6.43 euros at 1334 GMT, slightly off their earlier life-time low.

The German institution has long been a default source of lending and advice for German companies seeking to expand abroad or raise money through the bond or equity markets, a role which had the tacit backing of successive governments in Berlin.

Big cuts to its investment bank would make it harder for Deutsche Bank to fulfil this role and would mark a reversal of a decades-long expansion that began with the purchase of Morgan Grenfell in London in 1989 and continued a decade later by taking over Bankers Trust in New York.

The bank was already braced for a potentially rocky ride at this year’s gathering after two advisory groups – Institutional Shareholder Services (ISS) and Glass Lewis – urged investors to issue a vote of no confidence in management.

And one small but vocal investor last month added a vote to the meeting’s agenda to oust Achleitner as chairman because the bank “remains trapped in an unbroken downward spiral”.

But on Thursday Achleitner indicated that he would stay, telling shareholders: “Of course, I’ve made mistakes over the past seven years.”

CUTS OVERDUE

Cuts to the investment bank are overdue, Klaus Nieding, vice president of shareholder lobby group DSW, said.

Revenue at the division is forecast to fall to 12.5 billion euros this year, according to a consensus of analysts. That would mark a fourth consecutive year of decline, down 34% from 2015, based on Reuters calculations.

“Without cuts in investment banking, it will be very difficult or even impossible to achieve (Deutsche Bank’s targets)”, Nieding told its management at the meeting.

The forecast fall at Deutsche Bank contrasts with a projected 6% rise in JP Morgan’s investment banking revenue to $36 billion for the same period.

It is also far worse than a 5% drop in investment banking revenue across the industry from 2015 to 2018, according to Coalition, which tracks banking industry performance.

Sewing told some 4,000 shareholders that he would focus on investment bank divisions that benefit other segments, and those that are profitable on a stand-alone basis.

Among the departments that Sewing cited as successful were origination and advisory; corporate finance; foreign exchange; global credit trading and U.S. commercial real estate.

Announcements on job cuts are not imminent, two people with knowledge of the matter said.

Last year, soon after becoming CEO, Sewing announced a first wave of cuts that included a 25 percent reduction in the equities division. A source with knowledge of the matter said the business, which is mainly based in New York, was still a target, as well as prime brokerage.

Sewing, in a memo to employees seen by Reuters, said he was aware of the hardship ahead.

“The pace, and the demands, will be high. But it’s the only way we’ll become more sustainably profitable and remain competitive.”