“Restructuring-related charges”: Deutsche Bank makes a loss of 5.7 billion euros

Thursday January 30, 2020

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Deutsche Bank is again in the red. For 2019, the group reports a net loss of 5.7 billion euros. CEO Sewing attributes this to the renovation and is satisfied.

The largest corporate restructuring in the company’s history caused Deutsche Bank a net loss of 5.7 billion euros last year. It is the fifth consecutive annual loss. The negative is entirely due to the restructuring, said CEO Christian Sewing, in a press release the Deutsche Bank writes of “restructuring-related burdens”. By contrast, business in the core bank stabilized in 2019. Analysts had expected an average loss of five billion euros. The largest German money house has lost a total of 15 billion euros since 2015. From 2010 to 2014, it had earned a total of nine billion euros.

“Overall, we are satisfied with the numbers,” Sewing told ntv, attributing the loss to the “radical restructuring” of the money house. And “we made good progress there,” says Sewing. Deutsche Bank is on the right track. Now they no longer just want to defend their market position, they want to expand it. By the end of the past financial year, 70 percent of the renovation-related burdens of a good seven billion euros had already been processed.

In order to get back on track, Sewing had given the largest German money house a horse cure last summer. Bond trading, once the flagship of the institute, has to slim down considerably, stock trading is completely shut down. 18,000 jobs are lost worldwide. At the end of December, the bank still employed 87,600 people, 4100 fewer than a year earlier.

Analysts are skeptical

Analysts are skeptical whether Sewing’s conversion will succeed. “It is not clear that the strategy shift is a turning point for the bank,” wrote Barclays analyst Amit Goel in a share comment published a few days ago. “The bank will struggle to meet its earnings targets.”

In the fourth quarter, earnings declined group-wide by four percent to 5.35 billion euros. The corporate bank and private customer business suffered losses, while income from wealth management, which mainly consists of the fund subsidiary DWS, and investment banking increased. Bond trading was particularly good in the final quarter. Income here rose by almost a third to 1.2 billion euros. With US rivals like JP Morgan and Goldman Sachs, fixed income business performed even better in the final quarter. This was also due to the fact that the fourth quarter of 2018 was particularly weak across the industry.

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