Deutsche Bank slumps to quarterly net loss as legal costs weigh

Wed Oct 29, 2014 1:39pm EDT
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By Thomas Atkins and Arno Schuetze

FRANKFURT (Reuters) - Deutsche Bank AG (DBKGn.DE: Quote) made a net loss in the third quarter after falling victim to the legal costs which earlier this week prompted a management reshuffle designed to help tackle a long list of unresolved litigation issues.

Germany's top lender has stumped up around 7 billion euros ($8.9 billion) in fines and charges since 2012, overshadowing management efforts to restructure and reform the bank and making its stock one of the worst performers in the European sector so far this year.

The bank, which in June raised 8.5 billion euros to strengthen its balance sheet, originally hoped to clear the decks of legal issues in 2014, but has postponed that target to 2015. "There continues to be significant uncertainty about the timing and size of potential impacts" of litigation, Chief Finance Officer Stefan Krause said.

Its shares closed 2.4 percent lower, contributing to a 28 percent fall so far this year and placing the bank just a notch ahead of National Bank of Greece (NBGr.AT: Quote) in performance rankings in the STOXX Europe 600 index of European banks .

Deutsche Bank also sounded a note of caution on some of its revised 2015 profit goals after spending 894 million euros on litigation in the quarter, saying conditions remained challenging in several areas including "transaction" banking, or the provision of money transfers, trade finance and treasury services to corporations.

Signaling it had not done enough to resolve a long list of lawsuits and investigations in areas such as the setting of benchmark interest rates, the bank had said on Tuesday it was reorganizing its management board and had created a new role focused on legal issues, to be taken by audit head Christian Sewing.

Separately on Wednesday, in a sign Deutsche is attempting to clear the decks, the bank agreed to settle a long-running dispute with four traders it had fired, ending an embarrassing chapter in which the bank was accused of management lapses that led to attempts to manipulate reference interest rates.

"We aim to resolve these (issues) as soon as possible," co-Chief Executive Officer Anshu Jain said on a conference call.   Continued...

A pedestrian walks past the headquarters of Deutsche Bank in Frankfurt February 24, 2011. REUTERS/Ralph Orlowski