Deutsche Bank Reports Losses Due To Restructuring, Litigation

Deutsche Bank Reports Losses Due To Restructuring, Litigation
By Deutsche Bank AG (GIF format logo) [Public domain], via Wikimedia Commons

Deutsche Bank AG (NYSE:DB) (ETR:DBK) released its latest quarterly earnings report on Sunday, posting pretax losses of €1.153 billion for the December quarter. The bank said that heavy restructuring and legal costs weighted on its fourth quarter results and that this year will be another challenging one. The German bank’s revenue dropped 16% during the quarter to €6.58 billion as its corporate banking and securities business faced weakness during the quarter.

Shares of Deutsche Bank declined 3% on Friday at the New York Stock Exchange as reports that the bank was about to report the surprising losses circulated. Deutsche Bank was originally scheduled to release its December quarterly report on Jan. 29, so the report comes more than a week early. Regulators in Germany require companies to report information which could move their share price as soon as possible, which is why the earnings report came out early.

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Deutsche Bank reports key expenses

In legal fees, Deutsche Bank said it paid €528 million during the quarter. Adjustments to the value of funding, debt and credit cost the bank an additional €623 million, while costs from restructuring added up to €509 billion. For the full year, Deutsche Bank AG (NYSE:DB) (ETR:DBK) paid €2.5 billion in settlements and fines.

The U.S. Federal Housing Finance Agency fined the bank $1.9 billion last month on allegations that it defrauded Fannie Mae and Freddie Mac through sales of mortgage-backed securities. The European Union also fined the bank €725 million on allegations of fixing interest rates. Deutsche Bank recently suspended some of the traders it believed were involved in rigging Forex rates.

Deutsche Bank plagued by legal problems

Management at Deutsche Bank AG (NYSE:DB) (ETR:DBK) said this year will be another challenging one as they implement more changes in the wake of the continuing legal problems the bank faced all last year. However, they expect to hit their targets for 2015.

The bank has faced wave after wave of fines from various regulatory agencies as well as a number of lawsuits which continues to grow.

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