DEUTSCHE Bank was plunged into the red by the Eurozone debt crisis at the end of last year, Germany’s biggest lender revealed yesterday.
It lost €351m before taxes in the fourth quarter of 2011 due to “extreme market conditions”, the bank said, a dramatic reversal from the same period the previous year, when it booked a €707m pre-tax profit.
Deutsche’s private client and wealth management business was forced to take a €144m hit in large part from write-downs on Greek bonds, the full effect of which is still being negotiated with Athens.
But Deutsche’s investment bank was also hit hard by what it called “significantly reduced client activity across the industry”. The division lost €422m during the fourth quarter despite a drop a nine per cent its cost base due shrinking bonus packages.
Bonuses were cut due to falling revenues, which dropped by over 35 per cent to €1bn in debt sales and trading and by 38 per cent to €539m in equities. But the bank’s primary advisory business saw an even worse decline: revenues nearly halved to €430m.
The only part of the wholesale bank to see a marked increase in revenues in the fourth quarter was its loan products division, where the top line swelled by over a fifth to €61m.
Overall, the bank was forced to put aside more cash to cover credit losses, for which provisions rose by a quarter to €540m for the quarter, mostly due to integrating its acquisition of Postbank.
