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 Germany's top lender has stumped up around 7 billion euros ($8.9
billion) in fines and charges since 2012, overshadowing management
efforts to restructure and reform the bank and making its stock one
of the worst performers in the European sector so far this year.
The bank, which in June raised 8.5 billion euros to strengthen its
balance sheet, originally hoped to clear the decks of legal issues
in 2014, but has postponed that target to 2015. "There continues to
be significant uncertainty about the timing and size of potential
impacts" of litigation, Chief Finance Officer Stefan Krause said.
Its shares fell 1.4 percent by 7.03 a.m. EDT on Wednesday,
contributing to a 28 percent fall so far this year and placing the
bank just a notch ahead of National Bank of Greece in performance
rankings in the STOXX Europe 600 index of European banks.
Deutsche Bank also sounded a note of caution on some of its revised
2015 profit goals after spending 894 million euros on litigation in
the quarter, saying conditions remained challenging in several areas
including "transaction" banking, or the provision of money
transfers, trade finance and treasury services to corporations.
Signaling it had not done enough to resolve a long list of lawsuits
and investigations in areas such as the setting of benchmark
interest rates, the bank had said on Tuesday it was reorganizing its
management board and had created a new role focused on legal issues,
to be taken by audit head Christian Sewing.
"We aim to resolve these (issues) as soon as possible," co-Chief
Executive Officer Anshu Jain said on a conference call.
Separately, Deutsche named Marcus Schenck, a London-based Goldman
Sachs investment banker and former finance chief of German energy
group E.ON, to replace CFO Krause, who will take on a new board seat
in charge of strategy.
FURTHER PENALTIES
The bank is two years into a turnaround plan that has led to costs
falling and operating profit rising, but the threat of further
penalties from alleged misconduct has cast a shadow over its share
price and management's success claims.
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Investigators are looking into possible attempts at interest-rate
and forex-benchmark manipulation, high-frequency trading, possible
violations of U.S. sanctions on Iran and other activities.
Deutsche fell to a quarterly net loss of 92 million euros from a 51
million profit in the year-earlier period, while net revenue
increased a modest 2 percent.
Pretax profit rose 3.6 percent in Deutsche's important investment
banking division, boosted by a 15 percent jump in revenue derived
from trading debt and foreign exchange.
But that trading jump lagged a 24 percent rise seen by U.S. rivals
such as Citibank and JP Morgan, according to Reuters calculations.
"Other banks took better advantage of market opportunities in this
quarter than Deutsche Bank," said analyst Guido Hoymann at brokerage
Metzler Securities.
(Additional reporting by Clare Hutchison; Editing by David Holmes)
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