FRANKFURT (Reuters) - Deutsche Bank (DBKGn.DE) performed well in the third quarter, especially in retail and investment banking, helping it bear the burden of charges for legal and regulatory issues, two financial sources familiar with the matter told Reuters.
The bank has positioned itself as Europe’s “last man standing” in investment banking after rivals like Barclays (BARC.L) slashed operations.
“Real money is being earned once again,” said one of sources. Both sources declined to be named because they were not authorized to speak to the media.
Deutsche Bank, which is scheduled to release its quarterly results on Oct. 29, declined to comment on Monday.
Germany’s largest lender is striving to settle a number of probes before year-end, including those involving U.S. mortgage-backed bonds and the attempted manipulation benchmark interest rates, the sources said.
Deutsche also aims to conclude settlement talks with U.S. authorities before year-end over dealings with blacklisted countries such as Iran, the sources said.
The bank’s net result in the quarter will be burdened by charges for legal and regulatory settlements, although an improving operating performance will help the bank to shoulder those costs, the sources said.
Rising volatility in markets for debt and foreign exchange in the third quarter meant more business for big players like Deutsche Bank, Citi analysts said last week in a research note.
The business of underwriting stock and bond issues also remains strong, signaling a recovery in the second half of the year for banks like Deutsche and rivals Barclays, UBS AG UBSN.VX and Citibank (C.N), analysts at HSBC said separately.
Whether Deutsche Bank books its legal or settlement costs in the third quarter or the fourth - or whether the costs will be paid down next year - depends more on the actions of regulators than on a decision by the bank, the bank has said publicly.
Any conclusion in investigations into possible attempts to manipulate foreign exchange benchmarks is unlikely in 2014, and Deutsche Bank is not interested in an industry-wide settlement, the sources said.
Deutsche Bank launched a reform plan in 2012 to boost compliance functions after getting hit by a wave of post-financial crisis investigations.
The bank has set aside 7.8 billion euros ($9.8 billion) in the past two and a half years in fines and settlements and expects to face another 3 billion in costs in 2014.
Deutsche Bank shares rose 1.7 percent on Monday, placing it among top gainers in European banks .SX7P.
But the shares have dramatically underperformed this year, falling 17 percent since January compared with a 2 percent rise in European rivals, according to Thomson Reuters data.
Writing by Thomas Atkins; Editing by Georgina Prodhan