FRANKFURT (Reuters) - Deutsche Bank's (>> Deutsche Bank AG) shares rose on Monday as investors welcomed Chief Executive John Cryan's plan to overhaul Germany's biggest bank, cull top executives and cut costs to put past scandals behind it.

Investors lauded the shake-up, but await more details on Oct. 29 when Cryan will present a strategy update that is expected to cut back more of the investment bank and axe thousands of jobs.

He is under pressure to reform the bank, with costly litigation from a series of scandals and the fallout from the Asian market rout pushing its valuation well below rivals such Credit Suisse (>> Credit Suisse Group AG) and UBS (>> UBS Group AG), which have already started their own restructuring.

Shares in Germany's biggest bank were up 3.1 percent by 1130 GMT (12.30 p.m. BT), the top performer in a slightly firmer European bank sector <.SX7P>.

"The fresh start as far as personnel is concerned has been done. Now the bank needs to deliver substance," said Ingo Speich from Union Investment, one of Deutsche's top 20 shareholders.

One of the bank's top 30 institutional investors said Cryan was trying to mend bridges – both internally and externally.

"He is sending a message that ‘we are sorry, and we really mean it this time'," he said. The bank has been rocked by scandals, including investigations into possible manipulation of benchmark currency rates and dealings with Iran.

"Now we need to see the cost plan. It needs to be large and credible," said the investor, who asked not to be named due to the sensitivity of the issue.

Deutsche Bank said on Sunday it would split its investment bank in two and part ways with three of its eight management board members. The move sharpens its structure by realigning its units to reflect its biggest customer groups and representing each business segment in the management board.

Cryan is among new bosses at European banks planning to restructure, including at Credit Suisse, Barclays (>> Barclays PLC) and Standard Chartered (>> Standard Chartered PLC).

Thousands of jobs cuts, business closures and billions of euros of capital raisings are on the cards as the CEOs of Europe's biggest lenders respond to pressure to devise new strategies to revive them.

Credit Suisse's new Chief Executive Tidjane Thiam will reveal his strategy on Wednesday, which is expected to include plans to raise billion of euros and refocus on wealth and asset management, and reduce the investment bank.

SHOWING WHO'S BOSS

Deutsche aims to cut about 23,000 jobs, or roughly one quarter of total staff, through layoffs mainly in technology activities and by spinning off its PostBank (>> Deutsche Postbank AG) unit, people familiar with the matter told Reuters last month.

"We expect a dividend cancellation, a partial bonus pool clawback and business disposals," Barclays analyst Jeremy Sigee said, referring to the Oct. 29 strategy update.

Cryan earlier this month said a record pre-tax loss of 6 billion euros in the third quarter could mean a dividend cut and lower bonuses.

Analysts also expect Deutsche to reduce its risk-weighted assets by 50-100 billion euros (36.82-73 billion pound). At the same time, the lender's activities of trading bonds and stock - sometimes a cash cow, sometimes a loss maker - will come under scrutiny.

"The trading activities now have to prove standalone that they can earn their cost of capital over the cycle," said LBBW analyst Ingo Frommen. UBS analysts said the appointment of equities banker Garth Ritchie to head a new Global Markets unit showed the shift of importance away from fixed income.

As part of the shake-up announced on Sunday, the sales and trading activities will form a new division called Global Markets, while the corporate and transaction banking operations will be brought together in a Corporate & Investment Banking unit.

Out goes Colin Fan, the co-head responsible for securities trading and an ally of Anshu Jain, the former co-chief executive of the bank.

Stephan Leithner, Stefan Krause and Henry Ritchotte are also resigning from the management board, together with the head of Deutsche's wealth management business, Michele Faissola.

"You do have to be quite ruthless with investment bankers," the top 30 shareholder said. "These are very successful people with big egos – you have to show them who is boss. He (Cryan) is showing that."

(additional reporting by Kathrin Jones and Sinead Cruise; editing by Susan Thomas)

By Arno Schuetze