Bank loss
October 27, 2010
Deutsche Bank announced on Wednesday that it lost 1.2 billion euros ($1.66 billion) in the third quarter of this year due to a one-off charge linked to its purchase of shares in Postbank, Germany's largest retail banking network.
The loss compared to a profit of 1.4 billion euros during the same period in 2009.
The overall third-quarter loss was expected and Deutsche Bank had warned in September that it expected the Postbank acquisition to depress its balance sheet. The loss came in slightly lower than expected; analysts polled by Reuters had expected the bank to report a net loss of 1.33 billion euros.
The bank said on September 21 that it would incur a charge of 2.3 billion euros as part of the re-evaluation of its holdings in Postbank. Deutsche Bank owns nearly 30 percent of Postbank but has offered to buy all of the shares as it would like to increase its stake to more than 50 percent by the end of this year.
Broadening its revenue base
The Postbank takeover is part of a Deutsche Bank strategy aimed at reducing its dependence on the investment banking business by stepping up retail banking operations.
"Our retail banking operation is vastly increasing its footprint in Germany, which will balance our earning towards an even more stable business," said Deutsche Bank chairman Josef Ackermann upon releasing the results.
Excluding the Postbank charge, Deutsche Bank reported that it had a third-quarter net profit of 1.1 billion euros. As was the case with several of its rivals, Deutsche Bank's financial markets earnings were subdued during the quarter.
"In the third quarter 2010, the expected seasonal slowdown in client activity in July and August was exacerbated by ongoing sovereign risk concerns," said the bank.
Author: Kyle James (dpa, AFP)
Editor: Sam Edmonds