* Investors, regulators grow impatient with Deutsche
* Year-old plans to cut jobs, sell business falter
* Multi-billion-dollar fine looms
By Arno Schuetze and Kathrin Jones
FRANKFURT, Oct 10 (Reuters) - Threatened with a multi-billion-dollar fine from U.S. regulators, Deutsche Bank's management is rethinking elements of its year-old strategic overhaul that has made faltering progress, people familiar with the matter said.
The organisational change, launched in October last year by the then new chief executive John Cryan, aimed to slash costs by cutting staff, overheads and selling off some non-core businesses at Germany's largest lender.
But a year on, with its staff numbers barely changed and little clarity on what the bank's long-term business model will look like, management is being forced to find ways to speed up its turnaround.
"There will be some tweaks, likely decided on this quarter," said one person familiar with thinking at the bank. "It will hit areas where the bank is making no money."
The need to adjust the flagging plan has been given added urgency following a U.S. demand to pay up to $14 billion for the misselling of toxic mortgage securities before the financial crisis.
Worries that a fine of that size would cripple Deutsche have sent its shares to a historic low, prompting speculation that the government could be forced to help a bank, whose returns have already slumped to zero.
Last week, Christine Lagarde, the head of the International Monetary Fund, took the unusual step of questioning the bank's business model, urging it to "decide what size it wants to have" after turbulent weeks in which its share price plunged.
Now management is re-examining the strategy that has also yet to convince many politicians in Berlin.
Deutsche Bank's revamp involves cutting 9,000 staff. Yet headcount, which stood at more than 101,300 in the middle of this year, is higher than the roughly 98,600 one year earlier.
"More jobs will be shed," another person close to the bank said. But two people familiar with the bank's thinking said that high redundancy payouts and fears over losing business made the bank reluctant to sack too many people.
Commerzbank, a far smaller German rival, however, recently announced that it would axe more than a fifth of its workforce - almost 10,000 staff.
"The reorientation of Deutsche Bank is without doubt a massive task and will take a lot of time," said Pascal Boeuf at Woodman Asset Management.
Another pillar of Deutsche's plan was the sale of some parts of the business, such as its retail lender Postbank.
But that too has floundered because of tepid interest among potential buyers and management now expect the business will only be sold in 2019, in time to meet stricter rules requiring a larger capital cushion that enter force then.
Deutsche Bank is also some months later than expected in completing the sale of its stake in Chinese lender Hua Xia.
The European Central Bank recently allowed the pending sale to be counted, when checking Deutsche's health. Yet three months later, the deal is still pending - though Deutsche says it is still confident it will happen by the end of the year.
The bank's total assets - which stood at 1.8 trillion euros at the end of June - were also about 6 percent higher than a year earlier, disappointing analysts.
Politicians in Germany, who are preparing for national elections in 2017, are watching developments nervously.
They are worried that the state could ultimately be called on to support the lender, widely disliked among ordinary Germans for its aggressive pursuit of success on Wall Street.
Against this backdrop of widespread disenchantment with his strategic shift, Cryan is now responding.
Management have recently been focused on trying to negotiate down the U.S. fine for misselling toxic mortgages.
Their attention, however, is gradually turning back to the organisational revamp that has become bogged down in attempts to untangle a complex structure with outdated technology.
It is set to accelerate the overhaul and make a series of up to 20 business sales this year, according to a person familiar with the matter.
More dramatic changes are also possible. Investors have urged Deutsche Bank to merge with a European peer, such as Commerzbank or a large French or Spanish bank, people close to the matter said.
A government official said the ideal solution for Germany in the longer term would be a merger between Deutsche and its smaller rival Commerzbank - after several years of clean up.
The immediate chances for such a deal with a domestic or European rival appear slim. Senior executives from two large continental banks, when asked by Reuters, have played down such prospects.
Prompted by shareholder requests, executives from Deutsche Bank and Commerzbank held merger talks in August. But they quickly shelved the idea. (Writing by John O'Donnell; editing by Janet McBride and Rachel Armstrong)