Writedowns push Deutsche Bank to first full-year loss
Deutsche Bank has posted its first full-year loss in more than 50 years after a catastrophic three months for its core investment banking business.
By Philip AldrickLast Updated: 7:07PM GMT 05 Feb 2009
Josef Ackermann, CEO of Deutsche Bank addresses the media during the bank's annual news conference in Frankfurt. Photo: REUTERS
Germany's largest lender was hit by heavy writedowns and a plunge in revenues from trading debt and other products. A €5.8bn (£4bn) loss in the investment bank pushed the group to a record fourth quarter net loss of €4.8bn and a full year loss of €3.9bn.
Chief executive Josef Ackermann put on a brave face, insisting that the bank would not need government support and that the worst of the crisis was over. Revenues had recovered "significantly" in January to €2.8bn and Deutsche will pay a 50 cent dividend, "confidence in the bank's future performance", he said. The company paid a dividend of €4.50 in 2007.
Although refusing to rule out more "earthquakes", he said: "[The conditions] exposed some weaknesses in our business model. We are therefore repositioning our platform in some core businesses ... We are certain Deutsche Bank will emerge from this crisis stronger."
Further job losses are likely this year, he said, but not at the levels of last year, when 1,200 positions were axed and the proprietary trading desk closed. Mr Ackermann said last month that the bank expects no more "material negative impact" from leveraged loans, commercial real estate and other credit investments.
Germany's financial flagship has recently reinvented itself as a retail bank, striking a deal to buy 22.9pc of German post-office lender Deutsche Postbank for €1.1bn. Mr Ackermann reaffirmed plans to step down in May 2010 and added that the bank currently had no need for fresh capital.
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Deutsche Bank in first quarterly loss in five years
By Philip AldrickLast Updated: 12:50AM BST 01 May 2008
Deutsche Bank said it had managed to limit its losses through the sale of stakes in Daimler, Allianz and Linde
German financial giant Deutsche Bank has suffered its first quarterly loss in five years as conditions worsened to what chief executive Josef Ackermann described as "the most difficult in recent memory".
Worsening trading due to the credit crunch has forced the bank to write down €2.7bn (£2.13bn) of assets and scale back forecasts for its successful investment banking activities.
Finance director Anthony di Iorio added to the gloom by stating that the crisis had made it impossible to provide an accurate forecast for the full year. "These are very uncertain times - the markets are unpredictable," he said.
Deutsche reported a pre-tax loss of €254m for the first three months of the year, against a €3.16bn profit a year earlier, and saw revenues in its investment bank dwindle from €6.1bn to €880m as markets in key business areas such as leveraged finance and structured credit dried up. Analysts were phlegmatic about the writedowns but questioned whether the bank's core divisions could continue to operate successfully in the current environment.
Mr Ackermann, who has been among the most outspoken members of the industry on the need for new regulation, said:
"In the first quarter of this year, the financial market conditions were the most difficult in recent memory. In March, pressure on the banking sector was more intense than at any time since the current credit downturn began."
Deutsche said it had managed to limit its losses through the sale of stakes in Daimler, Allianz and Linde. Without these gains, the net loss would have climbed from €141m to €1.1bn.
Unlike British rivals, Mr Ackermann has not resorted to capital raisings. He stressed the bank was "well positioned to emerge stronger than ever from the crisis".
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