Deutsche Bank Loss Threatens Bonuses and Dividends

Squawk Box Live in Europe tracked reaction to a sharp dive in German exports and Deutsche Bank’s announcement that it’s preparing for a 6 billion euro ($6.7 billion) pre-tax loss for the third quarter. Global firms including Goldman Sachs Group Inc. have sold stakes in Chinese banks in recent years as new rules require more capital be held against the investments. Deutsche Bank’s price-to-book ratio – a comparison of how much the company says it’s worth and how the markets price it – has remained below 1.0 since 2007, lagging well behind its competitors. Deutsche Bank bought Postbank for more than EUR6 billion under former CEO Josef Ackermann in several stages starting in 2008.

In a memo to staff, Mr Cryan said details of how the bank planned to implement its strategy would be outlined alongside its third quarter results at the end of October. The news that the Swiss lender that it was seeking additional capital reflects more than its continuing difficulty to keep up with reforms that increased the amount of cash global banks needed to keep to stay solvent in a downturn.

At issue is 5.8 billion euro (or about $6.5 billion in USA terms) in impairment charges.

Coloplast fell 4.1 percent, leading losers on the pan-European FTSEurofirst 300 index down after UBS downgraded the Danish healthcare sector company to “sell” from “neutral”, slashing its target price to 375 crowns from 500. On the contrary, the most bearish, or conservative analyst has a one year target of $35.01. In particular, the revaluation of the 16-year-old Bankers Trust deal suggests new boss John Cryan may have another big surprise in store.

The warning stemmed from at least two charges and a company decision to make provisions to fight potential legal battles.

Elsewhere, HSBC Holdings PLC previously has said it is ending relationships with hundreds of clients who weren’t making it enough money.

Still, traders and analysts praised Cryan for taking action to tackle long-standing problems, and it also appeared unlikely the bank would have to raise capital soon despite the losses. In the third quarter, it continued a reduction of assets it loaded up on before the financial crisis, such as US mortgage-backed securities. Deutsche Bank AG has a 12-month low of €22.66 and a 12-month high of €33.41.

Meanwhile, Royal Bank of Scotland Group PLC continues to slash jobs and pull out of countries covered by its investment bank. Hua Xia is headquartered in Beijing.