German bank reports heavy losses
31/01/2013 - 08:39:13Reducing the value of assets and lawsuit expenses combined to push Deutsche Bank into a hefty fourth-quarter loss.
The bank, which is reshaping its business to keep larger financial buffers against losses, reported Thursday a loss of €2.15bn for the October-December quarter, compared with a €186m profit a year ago and analysts’ expectations of a bare profit of €62m.
Meeting the new requirements means dropping some risky investments and assets.
To do that, the bank took accounting losses of €1.9bn for the fallen value of businesses it had acquired before 2003, and for risky assets and investments that it is in the process of selling off.
Expenses for litigation the bank is facing came to €1bn.
The bank faces lawsuits and investigations along with other big banks over the manipulation of the London Interbank Offered Rate interest benchmark in past years. The rate is used to price trillions of pounds in global contracts.
Despite its reverse in the fourth quarter, the bank did post a net profit for the full-year of €665m, though that was way down on 2011’s €4.32bn.
On the revenue front, Deutsche Bank fared better. In the fourth quarter, revenue rose 14% to €7.9bn from €6.9bn. Full year revenue rose to €33.74bn from €33.22bn.
Co-CEOs Juergen Fitschen and Anshu Jain, who took over from Josef Ackermann last year, said the performance of the bank’s core business was otherwise strong, and management recommended an unchanged dividend to shareholders.
They said the losses came from “the most comprehensive reconfiguration of Deutsche Bank in recent times”.
Jain said that the bank’s outlook for 2013 is better than it was at the same time in 2012, with the US economy recovering and a calmer financial market backdrop over Europe’s debts.
However, he warned that the bank’s restructuring was “a journey that will take years, not months”.
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