Outgoing Deutsche Bank chief executive Mr Rolf Breuer yesterday set a challenge to his successor to lead a reinvention of the bank in order to secure its long-term future.

On his last day as head of Germany's biggest bank, Mr Breuer said Deutsche needed to restructure and cut costs drastically - even if this meant deals with Germany's huge state and co-operative banks - if it did not want to be left behind.

"Deutsche Bank has to reinvent itself if it wants to survive," Mr Breuer said in a speech at the bank's annual shareholders' meeting.

Mr Josef Ackermann, until now the head of Deutsche's investment bank, formally became chief executive at the end of the meeting.

Placing hopes for joint cost-cutting initiatives with the public sector that would mark a new turn for Deutsche Bank - which has tried and failed to merge with private sector rivals at home - Mr Breuer said there had to be consolidation in Germany and throughout Europe.

"This process should, however, be preceded in Germany by national and cross-sector consolidation if German banks are to play an active part in it," he said.

Mr Breuer's remarks coincided with news that Deutsche had begun a new job cull, axing nearly 1,000 positions globally in equities and information technology on top of 9,200 reductions announced last year, the bulk of which have been carried out.

Deutsche's high cost base and low profitability in retail banking and asset management have weighed on its shares, weakening the bank just as pressure to consolidate in Europe is growing.

Mr Breuer, who worked at Deutsche for 35 years, said Deutsche's depressed market value, which lags its rivals despite having more than doubled since he became its top manager in 1997, had limited the bank's strategic options.

"We have lost in terms of flexibility and manoeuvrability and are unable to take market opportunities as we would wish," Mr Breuer said.

Incoming Swiss chief executive Mr Ackermann has kept a low profile since being named Mr Breuer's successor two years ago. He is expected to hold off on strategic pronouncements until August, when the bank rolls out its first-half results.

Having turned Deutsche's investment bank into one of the world's largest, Mr Ackermann is expected to follow a back-to-basics blueprint calling for an accelerated sale of non-core assets, cost cuts, retail restructuring and a build-up in private wealth management, or services for wealthy people.