Raid on Deutsche Bank ‘has not helped’ revenue, finance chief says

Deutsche Bank AG’s quarterly revenue was impacted by the raids on its Frankfurt headquarters, Chief Financial Officer James von Moltke told Bloomberg on Sunday.

“The raid has not helped us on the revenue side, especially in a weak market environment like we have seen in December,” von Moltke said in email comments. “We expect these negative effects to fade away soon given that the initial market reaction on the negative news flow was overdone from our perspective.”

A group of about 170 law enforcement officials searched Germany’s largest lender in late November, fueling market concern about potential legal fines and sending the share price to a record low. The stock has declined more than 50 percent this year as investors doubt the latest turnaround plan, unveiled by Chief Executive Officer Christian Sewing in April, will be enough to restore profitability amid a protracted drop in revenue.

The bank’s struggle has spurred speculation in the media about a potential merger with Germany’s second-largest listed lender, Commerzbank AG. The German finance ministry, which owns about 15 percent in Commerzbank, is considering measures to facilitate such a merger should it be perceived as necessary, Bloomberg reported on Wednesday.

German Finance Minister Olaf Scholz told Reuters on Friday that “no one in the finance ministry has sleepless nights over Deutsche Bank, myself included.”

Von Moltke seemed to refer to those remarks and others recently made by financial regulators such as the head of the European Central Bank’s banking supervision arm, Daniele Nouy, and Joachim Wuermeling, a member of Bundesbank’s management board. They both also suggested that they support the bank’s current strategy.

“The market reaction to the negative news flow which started a month ago has been disproportionate,” von Moltke said Sunday. “Statements from the ECB, the Bundesbank and the German Minister of Finance reflect in our view much better where the bank stands today. We don’t have sleepless nights either.”

Police vans outside the headquarters of Deutsche Bank AG during a police raid in Frankfurt on Nov. 29.Photographer: Andreas Arnold/Bloomberg
Von Moltke also indicated that the bank will likely reach its end-2018 targets of cutting headcount to below 93,000 and keeping adjusted costs -- which strip out one-time expenses such as litigation and restructuring costs -- below 23 billion euros. CEO Sewing has also said that the bank will make an annual profit this year, which would be the first time since 2014.

“We remain on track to achieve our goals and financial targets for 2018,” von Moltke said. “Our balance sheet and asset quality are fundamentally solid and considerably better than at any other time in the last decade.”

 

Re-disseminated by The Asian Banker Reuters Bloomberg

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