Deutsche Bank posts surprise Q4 loss as scandals weigh

Sun Jan 19, 2014 5:05pm EST
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By Thomas Atkins

FRANKFURT (Reuters) - Deutsche Bank (DBKGn.DE: Quote) posted a surprise pre-tax loss of 1.15 billion euros for the fourth quarter due to heavy costs for litigation and restructuring, and warned that 2014 would another year of further challenges and reform.

The unexpected loss is likely to compound the problems that have dogged the bank over the past year, especially a lengthening list of lawsuits and regulatory matters, and to redouble pressure on co-chief executives Anshu Jain and Juergen Fitschen to prove their turnaround plan is on track.

In a statement, the German bank said it would meet its 2015 targets but warned that 2014 would again be tough: "We expect 2014 to be a year of further challenges and disciplined implementation."

The bank said that litigation cost it 528 million euros in the quarter, bringing the year's bill for fines and settlements to 2.5 billion euros and lowering its litigation reserves to 2.3 billion euros at year-end.

Deutsche Bank was fined $1.9 billion in December by the U.S. Federal Housing Finance Agency to settle claims that it defrauded two U.S. government-controlled companies in the sale of mortgage-backed securities before the 2008 financial crisis.

It was also fined 725 million euros by EU antitrust regulators for rigging interest rates.

The lender has suffered a hailstorm of criticism in recent weeks, fanning a sense of crisis at Germany's flagship lender as the list of scandals, investigations and negative headlines lengthens, while costly settlements and a downturn in trading revenue weigh on profit.

The surprise loss carries an echo of one year ago, when Deutsche Bank also posted a deep loss in the last quarter of 2012 as restructuring costs sent the bank 2.6 billion euros into the red on a pre-tax basis and virtually wiped out net profit for the full year.   Continued...

A Deutsche Bank sign is seen on the floor of the New York Stock Exchange January 15, 2014. REUTERS/Brendan McDermid