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Deutsche Bank expects $7 billion loss for 3rd quarter
Posted On Oct 08 2015
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Germany’s largest bank reported that it will take a almost $7 billion loss in its third quarter for a write down related to its corporate banking unit, according to a press release form the company.
Deutsche Bank (NYSE:DB) is lower by 5.8% in active after hours action after warning of €5.8B of impairment charges to goodwill and other intangibles, and telling investors to expect a reduction or elimination of the dividend for fiscal 2015. Shares in Deutsche Bank slumped after the announcement.
It turns out that 2015 has not been that great for Deutsche Bank.
In addition, Deutsche Bank had to sustain a 600 million euro fall in the value of its share in China’s Hua Xia Bank. Deutsche Bank now expects to report a fully-loaded CRR/CRD4 Common Equity Tier 1 ratio for the third quarter of approximately 11%, which includes the impact of European Banking Authority Regulatory Technical Standards (‘Prudential Valuation’) that were adopted in the quarter. Several of the biggest, including Deutsche Bank, have appointed new chief executives this year and are expected to roll out stark changes from predecessors’ displays of global ambition in recent years. Ltd. Deutsche Bank said its holding was no longer strategic.
Factoring in the bank’s profits, the loss is expected to total $7 billion.
Deutsche Bank is due to publish its third quarter results on October 29.
The bank expects to report a loss of about €6.2B. That’s worse than a few of its competitors.
The planned disposal of the mass-market Postbank retail operation also reflects a big shift from the past for Deutsche Bank. Deutsche Bank bought Postbank for more than EUR6 billion under former CEO Josef Ackermann in several stages starting in 2008. He noted that, on his first day in the job in July, he had cautioned that not all would be “sweetness and light” in the coming months. By our view, that is code for “there could be more before this is all said and done”. He didn’t go into details and said compensation decisions hadn’t been made.
