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Deutsche Bank Reports $3.5 Billion Loss As It Implements Turnout Strategy


07/24/2019


Deutsche Bank Reports $3.5 Billion Loss As It Implements Turnout Strategy
Deutsche Bank, currently implementing a strategy to stage on a turnaround missed analysts forecast for loss for the last quarter with a reported loss of 3.15 billion euros ($3.5 billion). The quarterly performance also highlights the challenges that the lender faces in the path to the turnaround.
 
While announcing a restructuring plan for a turnaround of its business earlier this month which would see about 18,000 job cuts and costing a total of about 7.4 billion euros, Deutsche Bank had warned that that would be incurring a loss of about 2.8 billion euros for the quarter.
 
There was a drop in the shares of the bank by as much as 5.8 per cent in Frankfurt because of the huge scale of the loss when compared to the performance in the same quarter a year ago when the bank registered a profit of 401 million euros. The bank said that it had to incur much higher goodwill impairment charges that it had thought while it had announced the restructuring plans on July 7 and this was the reason for the bigger loss.
 
Deutsche Bank is not only the largest bank of Germany but is also considered to be one the most important ones for the global economy and the global financial system – at par with the US giant banks JPMorgan Chase, Bank of America and the Citigroup.
 
However a series of losses and scandal has plagued the bank and has forced the bank to plan and implement a restructuring plan that is the biggest for an investment ever since the fall out of the global financial crisis of the 2007-08.
 
Significant steps in implementing the strategy have already been taken by the bank, said the lender’s Chief Executive Officer Christian Sewing on Wednesday. The bank has already issued notices for job cuts or has been informed that they would be losing their jobs to more than 900 of its employees.
 
During the quarter, “strong headwinds” were faced by the lender’s under performing investment bank which and included including questions about the bank’s future that spooked clients, said Sewing in a note to employees. “Now we can look ahead with more optimism,” he wrote.
 
The $7.2 billion US fine in 2017 over its alleged role in the mortgage market crisis was one of the biggest troubles in recent times for Deutsche Bank. That incident was a major blow for the bank and it resulted in many clients forsaking the bank.
 
Despite the efforts of the new head of the bank – with Sewing being appointed as CEO just last year, to stage a turnaround, there are many challenges.
 
After nearly six weeks of negotiations for a merger with rival Commerzbank was called off by the bank in April this year.
 
The bank now expects revenues for 2019 to be lower than 2018 which is a case of lowering of the bank’s expectations and forecasts for the entire year compared to its forecasts in earlier quarters.
 
The net revenue of the bank dropped by 6 per cent to 6.2 billion euros during the quarter compared to the expectations of the analysts of 6.3 billion euros in revenue.
 
(Source:www.hindustantimes.com)


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