Deutsche Bank posted a bigger loss than expected after taking a $3.8 billion charge to slash jobs and overhaul the bank
- Deutsche Bank announced a loss that was bigger than the bank previously indicated, sending the shares plunging in Wednesday trading.
- Credit Suisse analysts said the loss was wider than the €2.8 billion loss the bank previously flagged to the market, and in a note to clients called the results "disappointing."
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Deutsche Bank on Wednesday morning announced a loss that was bigger than the bank previously indicated, sending the shares plunging.
The German bank's loss in the second quarter was €3.1 billion ($3.5 billion) after "strategic transformation charges" of €3.4 billion - the Financial Times said the loss was the worst quarterly result for Deutsche since the 2008 financial crash.Credit Suisse analysts said the loss was wider than the €2.8 billion loss the bank previously flagged to the market, and in a note to clients called the results "disappointing." The analysts said adjusted pretax profit was a big miss - €588 million euros versus consensus of €806 million.
On July 7, Deutsche Bank announced a radical overhaul of the business. It entailed a cut of 18,000 jobs by 2022 and dropping the stock sales and trading unit. At the time Deutsche said the cost of restructuring would be €6 billion.
Deutsche Bank's shares fell as much as 5.2% and were hovering down about 3% lower on Wednesday. The bank said 900 jobs have already been cut or eliminated since the overhaul announcement.
"Excluding transformation charges, the bank would be profitable, and in our more stable businesses revenues were flat or growing," CEO Christian Sewing said in the statement. "This, combined with our solid capital and liquidity position, gives us a firm foundation for growth."
Credit Suisse analysts said that they "expect further downgrades to earnings estimates to weigh on the shares."
Sewing also in a letter to employees said that: "by and large our strategy is no longer being called into question, either by our investors or by the media or - most importantly - by our clients."Sewing added that the new capital release unit is already set up and that the assets due to be cut were already in the process of doing so.