After tax, Germany’s flagship lender is expecting a loss of 6.2 billion euros for the quarter, adding that without the impairments of goodwill and intangibles it would have lost only 400 million euros in the July to September period.
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The loss includes a €5.8 billion impairment of goodwill and certain intangibles tied to two divisions: corporate banking and securities, and private and business clients.
The firm said it’s taking a €5.8 billion writedown of goodwill and intangible assets as higher capital requirements reduce the value of its investment bank and it adjusts the estimate of what it will receive in the disposal of its Postbank unit.
Lastly, it’s holding $1.3 billion aside for anticipated litigation battles. The final amounts will bedetermined in the coming weeks and will be disclosed in our announcement ofthird quarter results, together with details of the implementation of Strategy 2020, which is now scheduled to occur on October 29.
After tax, Deutsche said, it is expecting a loss of 6.2 billion euros for the quarter.
The stock price of Deutsche Bank declined more than 4% to $27.50 per share during the extended hours, around 4:55 in the afternoon in New York.
Among the charges: An €600M impairment to the carrying value of Deutsche’s 20% stake in Hua Xia Bank, and a €1.2B litigation charge.
What is worse is that this may not be the end of the charges.
Deutsche Bank had turned to Postbank to diversify its funding mix by boosting consumer deposits in the midst of the global financial crisis.
The bank has been dogged by legal woes, including investigations into possible manipulation of benchmark currency rates and dealings with Iran.
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“While compensation considerations are not based on this year’s financial results alone, our shareholders will rightly expect employees to share something of the burden”, Cryan said in a memo to staff. “Having said that, you have my personal commitment to try to achieve a fair balance between staff and shareholder interests”.
