Germany’s largest bank announced a net loss for the third quarter and a shake-up of its management board, as it tried to draw a line under an expensive series of battles with regulators and clients.
Deutsche Bank AG (DB) said it lost €94 million in the three months to September, thanks to a provision of €894 million against possible fines and litigation costs
It’s now put aside a total of €3 billion to cover the cost of outstanding legal issues ranging from the mis-selling of U.S. mortgages before the financial crisis to alleged manipulation of benchmark interest rates and foreign exchange rates.
Deutsche’s actions came a day after Swiss giant UBS AG (UBS) also took a charge of $2 billion, mainly to cover risks from an investigation by regulators across the globe into forex manipulation.
The bank surprised many at the weekend by passing the European Central Bank’s stress test with flying colors, even before taking into account the €8.5 billion it raised in capital earlier this year. But despite the E.C.B.’s pass note, its shares still only trade at two-thirds of Deutsche’s book value of €37.37, suggesting that the market is less convinced of its health.
The bank also announced Tuesday evening it would replace its chief financial officer Stefan Krause in May with Goldman Sachs’s Marcus Schenck.
Krause had been under pressure from U.S. regulators in particular, who are unhappy with the quality of the bank’s financial reporting and who want it to hold much more capital in the U.S. to make sure it doesn’t ever need to be bailed out with U.S. taxpayers’ money again.
A huge player in many of the world’s most important financial markets, Deutsche’s ‘systemic’ importance means that it will be subjected to higher capital requirements than most other banks in future.
Elsewhere Wednesday, the run of underwhelming European bank earnings continued as Banco Bilbao Vizcaya Argentaria SA (BBVXF), Spain’s second-largest bank, missed consensus forecasts despite a slow improvement in its home economy in Spain. Net profit tripled from a year earlier due to lower losses on bad loans, but provisions against future losses were still higher than expected, both in Spain and in Mexico, one of its most important foreign markets.
Both banks reported modest improvements in their underlying businesses
