Deutsche Bank to rein in global bond trading in profit push

Mon Jan 20, 2014 12:09pm EST
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By Thomas Atkins

FRANKFURT (Reuters) - Deutsche Bank (DBKGn.DE: Quote) is to rein in global trading ambitions to put more emphasis on profitability than size at its core bond trading business where a sharp drop in revenues contributed to a big fourth quarter loss.

The 1.15 billion euro ($1.56 billion) loss compounds problems that have dogged Germany's biggest bank over the past year, including a list of lawsuits and regulatory wrangles and the need to shore up its balance sheet.

Co-Chief Executive Anshu Jain stuck by the bank's promise to meet its 2015 targets while predicting a tough 2014.

"We are forecasting that 2014 will represent the turning point where the bulk of our legacy losses, litigation and derisking costs ... will be behind us," he told analysts in a conference call on Monday.

Jain said Deutsche's debt downturn was structural and required shifting activities away from Europe and toward the more vibrant U.S., and away from size and towards profitability.

"This is a change," Jain said. "We could afford to carry those businesses in the past, we no longer can."

Deutsche's shares fell six percent in response to the unexpected loss. This compared with a decline of 0.8 percent in an index of its peers . The bank, which published the results on Sunday, had originally been set to report on January 29.

Revenue at Deutsche's debt-trading business, which accounts for nearly three quarters of its trading revenue, fell by almost a third, much more than at U.S. rivals which also suffered from a bond trading slowdown ahead of a cut in the Federal Reserve's bond buying to help the U.S. economy.   Continued...