Deutsche Bank expects full-year loss
By James Wilson in Frankfurt
Published: January 14 2009 10:34 | Last updated: January 14 2009 11:56
Deutsche Bank on Wednesday revealed its first annual loss in five decades after a fourth quarter in which it lost €4.8bn ($6.4bn).
Germany’s largest bank will make a net loss of about €3.9bn for 2008, compared with net profit of €6.5bn in 2007. Josef Ackermann, chief executive, said he was “very disappointed” and promised measures to address “weaknesses” at the bank.
EDITOR’S CHOICE
Deutsche Bank’s statement - Jan-14
FT Alphaville: Deutsche’s prop loss - Jan-14
Troubled banks drag Europe lower - Jan-14
Credit and equity trading businesses, including the bank’s proprietary trading, were severely hit by “exceptional market conditions”, Deutsche Bank admitted.
Deutsche Bank’s preliminary announcement of its earnings came as Deutsche Post, the partly state-owned logistic company, is set to become a minority shareholder under revised terms for the bank’s acquisition of Postbank.
Deutsche Bank will give shares to Deutsche Post as part-payment for Postbank, people familiar with the restructured transaction said. The stake is likely to be less than 10 per cent and would be held for less than a year, but could still mean Deutsche Post becoming Deutsche Bank’s biggest shareholder.
It could also see the German government – whose development bank owns about 30 per cent of Deutsche Post – having an indirect stake in Deutsche Bank. But people close to the bank on Wednesday rejected talk of part-nationalisation.
Mr Ackermann has repeatedly denied the bank needs state support. Deutsche Bank has not tapped a €500bn bank bailout fund set up by Berlin.
On Wednesday, Deutsche Bank said its Tier One capital ratio – a measure of its capital strength – was “in the region of 10 per cent” at the end of the year, consistent with the bank’s target.
The capital position reflected a dividend accrual of €0.50 per share, Deutsche said. It paid a dividend of €4 a share for 2007.
The revision of the Postbank deal – which could be confirmed after a Deutsche Post board meeting later on Wednesday – is a further sign that Berlin wants the country’s banking consolidation to remain on track, after it supported Commerzbank’s takeover of Dresdner Bank.
Commerzbank this week completed its purchase of Dresdner from Allianz after the insurer agreed a lower purchase price in exchange for a faster transaction. The government helped the deal through by giving Commerzbank more than €18bn in capital and taking a 25 per cent stake.
Deutsche Bank wants Postbank – which has more retail customers than any other German bank – to support its retail business and compensate for a big downturn in investment banking revenues.
However, the decision to acquire Postbank has come under scrutiny since it was revealed last September, two days before Lehman Brothers’ collapse triggered widespread bank bail-outs and a fall in the value of financial institutions.
Postbank – which this week warned of bigger losses than expected for 2008 – now has a total market value of about €3bn. By contrast, Deutsche Bank agreed to pay €2.8bn for just under 30 per cent of Postbank.
Deutsche Post, which owns 62 per cent of Postbank, has insisted it cannot countenance selling Postbank on less favourable terms.
Deutsche Bank had agreed with Deutsche Post that it could acquire more of Postbank from next year through a series of options.
This two-stage transaction could now be speeded up, which could be advantageous for Deutsche Post since it would cut its exposure to Postbank more quickly.
Under German rules, if Deutsche Bank bought more than 30 per cent of Postbank it would have to extend an offer to all Postbank shareholders – which it would not want to do at a time when its capital is stretched.
But people close to the transaction suggested the revised deal could include a convertible bond, which would not trigger a mandatory takeover offer.
Deutsche Bank declined to comment on a possible renegotiation, saying only that it remained committed to closing the first part of the transaction this quarter. Deutsche Post also declined to comment.
Deutsche Bank’s shares fell 5.85 per cent in morning Frankfurt trading. Shares in Postbank, which rose more than 11 per cent amid talk of a revised deal on Tuesday, fell 6.5 per cent while Deutsche Post shares fell 2.7 per cent.
By James Wilson in Frankfurt
Published: January 14 2009 10:34 | Last updated: January 14 2009 11:56
Deutsche Bank on Wednesday revealed its first annual loss in five decades after a fourth quarter in which it lost €4.8bn ($6.4bn).
Germany’s largest bank will make a net loss of about €3.9bn for 2008, compared with net profit of €6.5bn in 2007. Josef Ackermann, chief executive, said he was “very disappointed” and promised measures to address “weaknesses” at the bank.
EDITOR’S CHOICE
Deutsche Bank’s statement - Jan-14
FT Alphaville: Deutsche’s prop loss - Jan-14
Troubled banks drag Europe lower - Jan-14
Credit and equity trading businesses, including the bank’s proprietary trading, were severely hit by “exceptional market conditions”, Deutsche Bank admitted.
Deutsche Bank’s preliminary announcement of its earnings came as Deutsche Post, the partly state-owned logistic company, is set to become a minority shareholder under revised terms for the bank’s acquisition of Postbank.
Deutsche Bank will give shares to Deutsche Post as part-payment for Postbank, people familiar with the restructured transaction said. The stake is likely to be less than 10 per cent and would be held for less than a year, but could still mean Deutsche Post becoming Deutsche Bank’s biggest shareholder.
It could also see the German government – whose development bank owns about 30 per cent of Deutsche Post – having an indirect stake in Deutsche Bank. But people close to the bank on Wednesday rejected talk of part-nationalisation.
Mr Ackermann has repeatedly denied the bank needs state support. Deutsche Bank has not tapped a €500bn bank bailout fund set up by Berlin.
On Wednesday, Deutsche Bank said its Tier One capital ratio – a measure of its capital strength – was “in the region of 10 per cent” at the end of the year, consistent with the bank’s target.
The capital position reflected a dividend accrual of €0.50 per share, Deutsche said. It paid a dividend of €4 a share for 2007.
The revision of the Postbank deal – which could be confirmed after a Deutsche Post board meeting later on Wednesday – is a further sign that Berlin wants the country’s banking consolidation to remain on track, after it supported Commerzbank’s takeover of Dresdner Bank.
Commerzbank this week completed its purchase of Dresdner from Allianz after the insurer agreed a lower purchase price in exchange for a faster transaction. The government helped the deal through by giving Commerzbank more than €18bn in capital and taking a 25 per cent stake.
Deutsche Bank wants Postbank – which has more retail customers than any other German bank – to support its retail business and compensate for a big downturn in investment banking revenues.
However, the decision to acquire Postbank has come under scrutiny since it was revealed last September, two days before Lehman Brothers’ collapse triggered widespread bank bail-outs and a fall in the value of financial institutions.
Postbank – which this week warned of bigger losses than expected for 2008 – now has a total market value of about €3bn. By contrast, Deutsche Bank agreed to pay €2.8bn for just under 30 per cent of Postbank.
Deutsche Post, which owns 62 per cent of Postbank, has insisted it cannot countenance selling Postbank on less favourable terms.
Deutsche Bank had agreed with Deutsche Post that it could acquire more of Postbank from next year through a series of options.
This two-stage transaction could now be speeded up, which could be advantageous for Deutsche Post since it would cut its exposure to Postbank more quickly.
Under German rules, if Deutsche Bank bought more than 30 per cent of Postbank it would have to extend an offer to all Postbank shareholders – which it would not want to do at a time when its capital is stretched.
But people close to the transaction suggested the revised deal could include a convertible bond, which would not trigger a mandatory takeover offer.
Deutsche Bank declined to comment on a possible renegotiation, saying only that it remained committed to closing the first part of the transaction this quarter. Deutsche Post also declined to comment.
Deutsche Bank’s shares fell 5.85 per cent in morning Frankfurt trading. Shares in Postbank, which rose more than 11 per cent amid talk of a revised deal on Tuesday, fell 6.5 per cent while Deutsche Post shares fell 2.7 per cent.
