FRANKFURT (Reuters) - Deutsche Bank's (>> Deutsche Bank AG) new Chief Executive John Cryan delayed implementing a strategic overhaul by three months but told staff to expect tough reforms as he shakes up a group that he said had become too diversified and complex.

On his first day as CEO of Germany's largest bank, the 54-year-old Briton warned employees not to expect only "sweetness and light in the coming months," and that they must repair a reputation damaged by misconduct.

"I can tell you that we will decisively identify problems, apply fixes and hold accountable those who misbehave," he said in a letter to the bank's more than 98,000 workers which was published on its web site.

Cryan said he would stick with a strategy set in train by former co-CEO Anshu Jain but delay publication of details of the revamp by three months until the end of October.

Investors want to see the former investment banker, who has a reputation for swift action and straight talk, tackle a long list of problems that has pushed Deutsche Bank into a management crisis and depressed its share price.

Deutsche Bank shares traded 3.7 percent higher at 1105 GMT.

Deutsche Bank was shaken after its two co-chief executives quit following a string of regulatory run-ins, failed promises and a shareholder vote of no confidence.

In a sobering welcome message, Cryan said heavy fines had strained the bank's capital base, that relationships with regulators needed repair and decision-making had become slow and cumbersome.

"We have become inward-looking and bureaucratic. Our confidence to engage with the outside world has been dented," he said.

Cryan's litany of woes echoes those of many European banks suffering from low interest rates, high costs, bloated balance sheets and rising regulatory capital demands.

His comments resemble those last month by Bill Winters, the new CEO of Standard Chartered (>> Standard Chartered PLC), who also laid down the law, saying ethics needed to be beyond reproach and staff needed to fight financial crime.

CUTBACKS

Cryan described the bank as too complex, saying it was inefficient and burdened by ineffective processes, antiquated technology and unsuccessful investments, touching on criticisms raised separately this week by the head of German financial watchdog Bafin.

The new CEO vowed to close down business lines with poor prospects or standards. "We will narrow the scope of our activities. We do not have to be all things to all people."

Deutsche Bank has been plagued by fines and investigations, faces high operating costs and unhappy unions, and requires huge investments to modernise technology and restructure.

Deutsche and others have seen their profit margins crushed by low interest rates, overdue technology investments and rising regulatory burdens.

The group is also saddled with a sprawling investment bank that it nurtured while rivals such as Credit Suisse (>> Credit Suisse Group AG) and Barclays (>> Barclays PLC) cut back after the financial crisis.

In its investment bank, Deutsche has said it wants to reduce activities in commodities, interest rate repurchase agreements and derivatives including credit default swaps.

In April, the group's management outlined a new strategic roadmap for 2020. The plan, criticised by investors as short on substance, calls for selling the separately-branded Postbank (>> Deutsche Postbank AG) chain, slashing some 4.7 billion euros ($5.2 billion) in costs, closing some 200 retail branches, and carving some 150 billion euros from the investment bank’s balance sheet.

Cryan affirmed plans to sell Postbank as quickly and effectively as possible.

Cryan did not mention the issue of capital. The new strategy calls for the bank to fortify its leverage ratio to over 5 percent in the next 5 years from 3.4 percent at end-April, and to maintain its core equity tier one ratio of around 11 percent.

(Reporting by Jonathan Gould and Thomas Atkins; Editing by Keith Weir)

By Thomas Atkins