Deutsche Bank to forgo dividend as chief John Cryan looks to overhaul operations
08 Oct 2015
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Deutsche Bank AG may skip dividends for the first time in almost 60 years as co-chief executive officer John Cryan looks to overhaul the firm without going to shareholders for more capital.
According to the German lender, the third-quarter loss would probably amount to €6.2 billion, the largest three-month loss in at least a decade - due to write-downs and legal costs. Its shares were up 3.1 per cent and stood 0.5 per cent higher post noon in Frankfurt trading, erasing earlier losses of as much as 3.6 per cent.
According to commentators, the charges will clear the way for Cryan, who became co-CEO in July, to present a strategy later this month for bulking capital and boosting profitability. The firm had suffered heavily from regulatory and compliance expenses which had put paid to the firm's efforts to cut costs.
''You expect a new CEO to go through the balance sheet with an iron brush, but we didn't see him cleaning up like this,'' said Boris Boehm, who helps manage about €2.3 billion, including Deutsche Bank shares, at Aramea Asset Management AG in Hamburg, Bloomberg reported. ''Some investors are hoping that the write-downs of today will be the profits of tomorrow.''
Due to the projected loss, Deutsche Bank's board will recommend " a reduction or possible elimination" of the stock's dividend, the bank said in a statement. The dividend currently was 83 cents a share.
The warning stemmed from at least two charges and a company decision to make provisions to fight potential legal battles. Those losses will severely hit any profits the company might make in its third quarter.
According to the bank, the core of the anticipated loss was due to higher regulatory requirements to have more cash and the cost to get rid of its former subsidiary, Postbank.
It was also taking a $673 million write down in its stake of a Chinese bank, Hua Xia in which it has a near 20-per cent stake. Hua Xia is headquartered in Beijing.
According to the German lender, the third-quarter loss would probably amount to €6.2 billion, the largest three-month loss in at least a decade - due to write-downs and legal costs. Its shares were up 3.1 per cent and stood 0.5 per cent higher post noon in Frankfurt trading, erasing earlier losses of as much as 3.6 per cent.
According to commentators, the charges will clear the way for Cryan, who became co-CEO in July, to present a strategy later this month for bulking capital and boosting profitability. The firm had suffered heavily from regulatory and compliance expenses which had put paid to the firm's efforts to cut costs.
''You expect a new CEO to go through the balance sheet with an iron brush, but we didn't see him cleaning up like this,'' said Boris Boehm, who helps manage about €2.3 billion, including Deutsche Bank shares, at Aramea Asset Management AG in Hamburg, Bloomberg reported. ''Some investors are hoping that the write-downs of today will be the profits of tomorrow.''
Due to the projected loss, Deutsche Bank's board will recommend " a reduction or possible elimination" of the stock's dividend, the bank said in a statement. The dividend currently was 83 cents a share.
The warning stemmed from at least two charges and a company decision to make provisions to fight potential legal battles. Those losses will severely hit any profits the company might make in its third quarter.
According to the bank, the core of the anticipated loss was due to higher regulatory requirements to have more cash and the cost to get rid of its former subsidiary, Postbank.
It was also taking a $673 million write down in its stake of a Chinese bank, Hua Xia in which it has a near 20-per cent stake. Hua Xia is headquartered in Beijing.
