Deutsche Bank tumbles on a disappointing quarterly loss after the 'necessary evil' spending on a massive overhaul
- The bank posted €315 million in costs on "severance and transformation-related charges," which dragged on the bank's third-quarter earnings.
- "The most significant driver" of the sales decline, the bank said in the statement, was "our strategic decision to exit equities sales and trading."
- "Bond trading is about all it has left in investment banking," said one analyst. Sales in that unit plunged 13%.
- The shares plunged 4.8%.
- Watch Deutsche Bank trade live.
- View Business Insider's homepage for more stories.
Deutsche Bank CEO Christian Sewing called it the "most comprehensive restructuring of our bank in two decades."
The costs of that overhaul - €315 million in spending on "severance and transformation-related charges" - dragged on the bank's third-quarter earnings. The shares tumbled 4.8%.
Net revenues were €5.3 billion in the quarter, a 15% drop.
"The loss is in large part due to restructuring costs that are the necessary evil of trying to get the bank back to profitability," said Neil Wilson at Markets.com. "Restructuring takes time, of course, and may be more expensive than analysts think, but Deutsche has had a decade and several attempts at this already. And the decline in revenues can't be masked."
The bank on Wednesday posted a net loss of €832 million ($924.83 million) due to "strategic adjustments."
"The most significant driver" of the sales decline, the bank said in the statement, was "our strategic decision to exit equities sales and trading."
"Bond trading is about all it has left in investment banking," Wilson said. Sales in that unit plunged 13%.
Deutsche's rivals on Wall Street have been able to boast about their fixed-income trading units, with JPMorgan reporting a 25% increase in revenue in its FICC division.
In July, the bank said it will axe 18,000 jobs as part of a major restructuring. Deutsche said at the time it would be cutting its stock sales and trading unit as part of its plan to rid itself of the more volatile divisions.
Some executives won millions in "golden parachute" payments, with the bank spending €52 million on payouts to executives.
- WATCH: "Someone said I am good enough to be a rickshaw puller," shares Freshworks CEO Girish Mathrubootham in a candid chat
- Watch a raven take out a Google drone mid-air as the tech giant is forced to ground its home delivery service due to bird attacks
- Those who have held these stocks for a decade have only lost money
- After Moderna chief, Pfizer CEO says COVID-19 likely to end in a year
- Like many 23-year-olds, Google is facing ‘trust’ issues
- COVID-19: Mizoram's positivity rate at 32% after 1,659 new cases registered in the state
- IPL 2021: Mumbai Indians slips down to seventh spot after losing a match to RCB
- The Amazon bribery case in India is getting murkier and the lack of transparency is not helping