FRANKFURT (Reuters) - Deutsche Bank's (>> Deutsche Bank AG) biggest strategic overhaul under co-chief executives Anshu Jain and Juergen Fitschen got a thumbs down from investors on Monday who judged it too little too late.

Germany's flagship lender has trailed rivals under the tenure of Jain and Fitschen who despite the reverberations from the financial crisis stuck to an expensive universal banking model offering everything from mortgages in Germany to derivatives in London.

Faced with tough regulations, weak markets and mounting legal bills from misconduct settlements, Deutsche is now following rivals such as UBS and Barclays (>> Barclays PLC) in axing unprofitable business lines to boost earnings and shore up its balance sheet.

“Restructuring is going on since 2012. One could have taken much bolder steps much earlier," one shareholder said of the plan that was detailed on Monday.

Shares in the bank skidded nearly 6 percent and were trading down 4.13 percent at 1015 GMT (6.15 a.m. ET).

After four months of deliberations, Jain and Fitschen have decided to cut up to 150 billion euros in investment bank assets, sell their Postbank (>> Deutsche Postbank AG) retail division via a stock market listing by the end of 2016 and invest more in equities trading and wealth management.

The plan, which will see the bank take a one-off hit of 3.7 billion euros, is meant to boost cost savings by an annual 3.5 billion euros by 2020 and drive a return on tangible equity, a key measure of profitability, of at least 10 percent in the same period.

But the restructuring strategy was the less radical of two options considered by Deutsche's board and investors viewed it as unambitious. Previously, the bank had targeted a return on equity of 12 percent for 2015.

Jain apologized for not moving faster to reshape the group but said the stock market slide should not be the final word on the strategy. The bank has said it will give more details on its plans within 90 days.

"Some investors would have wanted a more radical choice and perhaps we’ve disappointed that segment of investors,” he told a news conference in Frankfurt. "It is possible that the market expected more detail."

"We’re coming back with a much more comprehensive set of numbers."

He said stiffer regulatory requirements were partly to blame for the lower profitability target and he said the decision to sell Postbank was mostly driven by fears that regulators would keep increasing capital requirements.

Keeping Postbank, with its heavy balance sheet worth some 150 billion euros, could hinder the bank from reaching its 5 percent leverage ratio target from 3.4 percent at the end of the first quarter. The 5 percent target will put it well ahead of European requirements.

But while some investors were questioning why it would take until 2020 to meet its profitability targets others were wondering whether they were achievable at all.

"There are 2020 targets and savings/investment plans which we and the market will take with a grain of salt, given their chequered history," said Omar Fall, an analyst with Jefferies International.

LEGAL HEADWINDS

The strategic overhaul comes at a tumultuous time for the bank and its leaders.

Fitschen will stand trial in Munich on Tuesday over allegations that he and other former executives worked to precipitate the collapse of the Kirch media empire in order to generate bountiful advisory fees to restructure the group. Fitschen has said publicly that he "neither lied nor deceived" in the Kirch case.

Last week, UK and U.S. authorities fined the bank a record $2.5 billion for manipulating benchmark interest rates. The size of the fine reflected how Deutsche's managers compounded their traders' misconduct by misleading regulators during their investigations.

The fine drove a 50 percent slide in Deutsche Bank's first quarter earnings, overshadowing a strong performance at its investment bank, the group's main profit driver.

As part of its new strategy for its investment bank, Deutsche will pull back its dealings in repurchase agreements and swaps, which are used by banks and companies to hedge risk, and redeploy up to 70 billion euros in leverage to other trading areas such as equities and emerging market debt.

It will also close up to 200 branches -- more than a quarter of its retail network -- by 2017 and exit one tenth of the countries it currently operates from.

The bank did not say how many jobs would be lost or which countries it would exit. It plans to spend up to 1 billion euros on digital technology.

While it switches gears in its investment bank, Deutsche plans to expand its asset and wealth management business by up to 10 percent a year until 2020 and boost the number of relationship managers by 15 percent in key markets.

(Writing by Carmel Crimmins; Editing by David Goodman and Anna Willard)

By Thomas Atkins and Jonathan Gould

Stocks treated in this article : Deutsche Bank AG, Deutsche Postbank AG, Barclays PLC