Deutsche Bank faces up to long battle to restore reputation By Thomas Atkins and Arno Schuetze FRANKFURT (Reuters) - The reputational risks surrounding Deutsche Bank (DBKGn.DE) have grown and it still has some way to go to win back public trust and prove it can overhaul its corporate culture, the bank's two chief executives said on Wednesday. Germany's largest lender is facing an array of investigations into the conduct of its employees and a jump in litigation costs was partly responsible for a surprise 1 billion euro ($1.37 billion) fourth-quarter loss that has heaped more pressure on Anshu Jain and Juergen Fitschen. "We know that here we have something to prove to you," Fitschen told reporters at the bank's annual news conference in Frankfurt. We have realized that the reputational risk has become more and more significant. Deutsche Bank paid about 2.1 billion euros in fines in December, but fresh investigations - including one into possible manipulation of the $5.3 trillion-a-day foreign exchange market - have led analysts and investors to forecast an additional 1.4 billion to 2 billion euros in settlement costs for 2014 and 2015. The bank has moved to shake up corporate practices, particularly at its investment banking operations in London and New York, turning down deals viewed as too risky, deferring bonuses for dealers and giving them less leeway on trades. Jain admitted that the more cautious attitude had lost Deutsche business but said he was happy to pay that price and was confident that most of the litigation problems would be sorted out this year. "We are hopeful that towards the end of 2014 we will have the bulk behind us," he said. The ability of the duo to oversee the cultural overhaul has met with skepticism in some quarters, given that Indian-born Jain once headed the investment bank at the centre of many of the current tribulations and German-born Fitschen has become embroiled in an investigation into tax evasion. Jain said he was accountable for the mistakes that were made in the investment bank, particularly during the "very troublesome period" preceding the financial crisis, but insisted that Deutsche needs his experience. German financial regulator Bafin questioned the rigor and independence of the bank's internal investigation into alleged rigging of Libor, the London inter-bank offered rate, according to documents leaked to German media. Fitschen, however, dismissed talk of a breakdown in Deutsche's relationship with Bafin. "Don't be led by the tone of voice of one letter," he said. There are intensive exchanges on every subject, and these exchanges can be described by both sides as open and constructive. For all its woes, Deutsche has stuck to ambitious earnings goals for 2015. These include return on equity of 12 percent, six times higher than last year, despite a tough trading environment in its core debt markets. The bank is aiming to boost returns by shrinking its balance sheet and is about a third of the way through a crash-diet plan launched in June to cut 250 billion euros ($338.61 billion) from its books. The faster the bank trims, the easier it will be to meet regulators' capital demands. Deutsche said on Wednesday that it expects the reduction of non-core assets to slow this year and that its 2013 dividend will be kept at the same level as the 2012 payout. Jain and Fitschen also said they were well-positioned to lead consolidation in Europe after 2015, though they did not specify when or where deals would happen. Bankers in Davos last week said they expect a European Central Bank (ECB) health check of the euro zone's largest banks this year to reignite domestic and cross-border merger activity by rebuilding confidence among lenders. Jain and Fitschen declined to comment on the apparent suicide of William Broeksmit, a former senior manager at Deutsche Bank. Broeksmit, who retired from the bank last year, was found dead at his home in London on Sunday. Editing by Carmel Crimmins and David Goodman