Deutsche Bank has suffered its biggest quarterly loss since the depths of the financial crisis as the German lender digested almost half of its total three-year restructuring bill of €7.4bn in the second quarter.
The bank on July 7 announced one of the most radical investment bank restructuring plans since the financial crisis a decade ago, including cutting 18,000 jobs and shrinking its balance sheet by more than a fifth.
On Wednesday, Deutsche Bank said it has already jettisoned over the past couple of weeks 12 per cent of the risk weighted assets that it had earmarked for sale. The lender added that more than 900 employees were “given notice or informed their role will be eliminated.”
The bank booked €3.4bn in “strategic transformation charges” in the second quarter, which caused a net loss of €3.1bn — the worst quarterly result since the fourth quarter of 2008.
Excluding those one-off effects, net income between April and June was €231m, while adjusted pre-tax profit was at €441m, missing analyst expectations.
“We have already taken significant steps to implement our strategy to transform Deutsche Bank,” chief executive Christian Sewing said in a statement, adding that the “more stable businesses” the bank wants to focus on in the future saw stable or increasing revenues.
The bank’s common equity tier one ratio — a key indicator of balance sheet strength — fell to 13.4 per cent, compared to 13.7 per cent in the first quarter.
The bulk of the restructuring charges booked in the second quarter — a write down on deferred tax assets, goodwill and impairments on software — did not affect the bank’s capital position, which Deutsche said will temporarily fall to 12.7 per cent by 2020 due to restructuring costs.
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