Wednesday 17 January 2018

Deutsche Bank ceo under pressure as it posts €2bn loss

Deutsche Bank CEO John Cryan reacts during the bank's annual news conference in Frankfurt. Photo: Reuters
Deutsche Bank CEO John Cryan reacts during the bank's annual news conference in Frankfurt. Photo: Reuters

Arno Schuetze

Deutsche Bank fell further behind its Wall Street rivals in 2016, lagging their strong rebound in bond trading in the last three months of the year and increasing pressure on ceo John Cryan ahead of an expected strategy update this spring.

Germany's flagship lender posted a net loss of €1.9bn in the final quarter of 2016 as legal costs for past misdeeds weighed heavily on results.

Its shares fell more than 5pc, the biggest losers among German blue-chip stocks. Analysts had expected the bank to post a loss of €1.16bn.

"Our strategy will not fundamentally change," Mr Cryan told a news conference, adding the bank would continue to respond to changes in global markets and regulation.

This could include withdrawing from more markets and client groups, but not another round of job cuts, he said.

"Our expectation is that we will be profitable this year," Cryan said, adding it was too early to say when dividend payments would be resumed.

The bank started the year well, with its cash cow debt trading unit seeing revenue rise 40pc year-on-year in January, he said.

But some investors want more detail on the future course of the bank.

"Investors want to know where the bank is heading. It is important that an adjustment of the strategy happens fast," said fund manager Helmut Hipper from Union Investment.

Revenues at Deutsche's bond trading division were up 11pc in the fourth quarter as it benefited from a surge in business across interest rate products, commodities and foreign exchange (FICC), after Donald Trump's surprise victory in the US presidential election.

But it lost market share to Wall Street banks, some of which more than doubled bond revenues, in part as the German lender pared back its investment bank to reduce risk, cutting products and ties with thousands of clients.

"Overall, this is a mixed set of results ... with evidence of franchise damage," Goldman Sachs analysts said in a note.

Upcoming regulations will determine whether Deutsche Bank can afford to reintegrate retail arm Postbank, which it had put up for sale to lift its capital ratios, but would prefer to keep.

They will also determine whether Deutsche floats its asset management arm to free up capital.

Finance chief Marcus Schenck said the bank would decide on the future of Postbank after overhauling it during the course of this year, while Cryan added he had nothing to announce at the moment regarding the asset management unit.

The bank's strategy is a concern not just to shareholders, but also to Germany after fears of mounting fines last year prompted speculation it could even need a state bailout.

With a balance sheet of €1.6 trillion, Deutsche was dubbed as the riskiest big global bank by the IMF last year. (Reuters)

Irish Independent

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