FRANKFURT, Germany – Deutsche Bank is to cut costs, shed risky investments and tighten executive pay practices as part of an effort to strengthen itself against a slackening global economy and more regulation.

The shakeup follows a 100-day review by new co-CEOs Juergen Fitschen and Anshu Jain, who took over from Josef Ackermann in May.

The measures announced yesterday are aimed at helping the bank face uncertain economic growth and governments which are demanding that banks hold more reserves against losses.

Deutsche Bank AG is a major player in global banking. It’s Germany’s largest bank with a large domestic retail operation. Outside Germany, its investment banking division is a major player in helping companies raise money through issuing shares and selling bonds.

Yet along with other banks, it has seen its earnings fall — especially from investment banking. Second-quarter earnings slid 46 per cent to (euro) 661 million ($75 billion) while revenues were down six per cent to (euro) 8 billion. The bank attributed the bad results to market turbulence and Europe’s financial crisis. The bank has already announced 1,900 job cuts, most of them outside Germany.

Jain told reporters Tuesday that the bank wanted to be “an industry leader” in reforming compensation practices, which have been a chief target of for critics of the industry. Large bonuses have been blamed for spurring risky behaviour, with losses in the worst cases coming home to taxpayers through bank bailouts.

He added that highly pay remained a chief cost factor in investment banking and would have to be be reduced. The new measures will involve top executives seeing their bonuses, largedly consisting of company stock, deferred for five years. That is instead of the current practice of giving them by stages over three years.

The idea is to reduce the incentive for decisions that pay off in the short term but carry longer-term risks to the bank and its shareholders.

Jain said that in cases where there were serious losses or misconduct, the bonuses could be taken back by the bank. It amounts to a loss of liquidity for the individual, he said, but means “a huge alignment of his behavior” with the company’s share price.

And, “if there’s a loss at the group level, we take it all back,” he said.

Jain told reporters that the reduced returns on the bank’s equity no longer justified the high compensation. “We cannot expect our investors to allow us to pay the bonuses which we have in the past,” he said.

The bank said it would also slim down its investment banking operation and reduce the amount of risky assets the bank holds. That will help it increase its financial cushion against losses, as demanded by the Basel III international agreement.

The CEOs added that the bank is meeting new capital targets under Basel III and new European Union measures, but still needs to go further to keep up with other big banks. To do that, the bank is deleveraging, or reducing debt and risk, even more. Part of that will mean putting (euro) 135 billion in investments it no longer considers essential into a new unit that will sell off a third, or (euro) 45 billion, by March 2013.

The bank also said it plans to costs by (euro) 4.5 billion a year by 2015. Areas targeted for cutbacks include its operations in expensive locations such as New York and London, some of the thousands of different legal entities associated with the bank and inefficient parts of its computer systems.