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Legal costs hit Deutsche Bank

Wednesday, October 29, 2014 - 01:49

Deutsche Bank suffers a disappointing Q3 loss of 92 million euros. The charges for Libor manipulation and other potential fines are hitting Germany's biggest lender hard. Amy Pollock reports.

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A 92 million euro loss was a hefty third quarter blow for Germany's top lender. And it's legal charges that are eating into Deutsche Bank's modest two percent rise in net revenue. It spent almost 900 million euros on litigation costs, bringing total spending on fines and settlements to 7 billion euros since 2012. And George Hay from Reuters Breakingviews says the bank still can't say when the pain will end. (SOUNDBITE) (English) REUTERS BREAKINGVIEWS COLUMNIST, GEORGE HAY, SAYING: "Deutsche hasn't settled Libor manipulation charges yet so we don't know how much they are going to be hit for. This is the thing that two years ago kicked off the current craze of litigation when Barclays got hit for it. The other thing that is hanging over European and global banks is what they are going get hit for foreign exchange manipulation, which is the version of Libor in the FX market. That's a complete unknown." Some are also wondering whether Deutsche backed the wrong horse by focussing on its investment bank with growth in Europe so weak. (SOUNDBITE) (English) REUTERS BREAKINGVIEWS COLUMNIST, GEORGE HAY, SAYING: "Until we get clarity on this, I think they're going to keep trading at 0.5 times their book value, their overall net asset value, which is way below the pack." The investment division did see a nine percent rise in revenue. And is still on course for a 13-15 percent profit gain. But its US rivals are outperforming it - some by far. Two years after the launch of turnaround plan that's not good enough. No surprise then that changes were made to the board ahead of the results. Goldman Sachs banker Marcus Schenck will replace CFO Stefan Krause. He moves to a strategic role while a new head of auditing has the tough task of litigation.

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Legal costs hit Deutsche Bank

Wednesday, October 29, 2014 - 01:49