Deutsche Bank gambles German goodwill with bonus bonanza

John Cryan Deutsche’s chief executive blamed the one-off cost of US tax reforms for the after-tax loss

This was the third consecutive annual loss for Deutsche Bank. "It has always been clear that it would take more than two or three years".

Deutsche Bank's CEO says he understands the need to find a more stable way to make money through things like lending and mortgages, and says other matters like an initial public offering of its wealth management unit are progressing. The bank said that going forward, the reduction in the USA federal tax rate is expected to have a positive impact on net income.

Looking ahead, John Cryan, Chief Executive Officer of Deutsche Bank, said, "We believe we are firmly on the path to producing growth and higher returns with sustained discipline on costs and risks".

"The issue is why the revenues are so poor", said Piers Brown, an analyst in London with Macquarie Bank Ltd.

Prolonged revenue declines and other setbacks have forced Cryan and Deutsche Bank's supervisory board to face increased speculation about CEO succession planning.

Cryan said Friday that many important steps would take time to show up in improved earnings. He also said that accruals for bonus payments in the final quarter were up by 750 million euros compared with the final quarter of 2016.

The Corporate & Investment Bank's revenues fell 16%, reflecting low volatility in all asset classes and low client activity in key businesses, as well as hard trading conditions in certain areas. Peter Selman, the ex-Goldman Sachs partner hired to run the struggling business late a year ago, has a "specific equity derivatives background", he said.

The German lender reported a net loss of 2.2 billion euros ($2.75 billion) in the fourth quarter of 2017 - worse than the net loss of 1.25 billion euros that Reuters analysts had forecast. The stock has lost over half its value since early 2014. Deutsche Bank has retreated from some of these activities to the benefit of its American rivals, which picked up market share and have become increasing dominant, according to data from Coalition, an analytics company. They were down 4.5 percent on the day at 14.11 euros in early afternoon trading in Europe. Fourth-quarter revenue declined 16% overall in the corporate and investment bank.

Deutsche Bank executives say Europe needs its investment bankers, and it's an issue that's all the more pressing as the United Kingdom, whose capital is the world's financial hub, moves closer to leaving the European Union bloc. Citigroup Inc. fell 18 percent and Goldman Sachs Group Inc. plunged 50percent.



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