Deutsche Bank faces up to long battle to restore reputation

Wed Jan 29, 2014 6:27pm EST
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By Thomas Atkins and Arno Schuetze

FRANKFURT (Reuters) - The reputational risks surrounding Deutsche Bank (DBKGn.DE: Quote) have grown and it still has some way to go to win back public trust and prove it can overhaul its corporate culture, the bank's two chief executives said on Wednesday.

Germany's largest lender is facing an array of investigations into the conduct of its employees and a jump in litigation costs was partly responsible for a surprise 1 billion euro ($1.37 billion) fourth-quarter loss that has heaped more pressure on Anshu Jain and Juergen Fitschen.

"We know that here we have something to prove to you," Fitschen told reporters at the bank's annual news conference in Frankfurt. "We have realized that the reputational risk has become more and more significant."

Deutsche Bank paid about 2.1 billion euros in fines in December, but fresh investigations - including one into possible manipulation of the $5.3 trillion-a-day foreign exchange market - have led analysts and investors to forecast an additional 1.4 billion to 2 billion euros in settlement costs for 2014 and 2015.

The bank has moved to shake up corporate practices, particularly at its investment banking operations in London and New York, turning down deals viewed as too risky, deferring bonuses for dealers and giving them less leeway on trades.

Deutsche Bank cut pay in its corporate banking and securities division to 5.3 billion euros last year, down 14.4 pct from 2012.

The number of front office staff in corporate banking and securities fell 2 percent during the year to 8,435, although the compensation figure for that division also includes pay for some other staff, the bank said.

Compensation and benefits across the entire bank was 12.3 billion euros last year, down 8.7 pct from 2012.   Continued...

Logos of Deutsche Bank AG are seen in Tokyo September 9, 2013. REUTERS/Toru Hanai