Deutsche Bank likely to reveal losses of $1 billion
Deutsche Bank AG, shaken last quarter by a $1.68 billion loss trading or the firm’ account, is reeling again, this time from about $1 billion of bad bets in a unit led by credit-trader Boaz Weinstein in New York, people familiar with the matter said.
The magnitude of the group’s loss, and its impact on the firm’s fourth-quarter results, remain uncertain as the value of some stakes gyrate with the markets and the Frankfurt-based bank seeks to unwind positions, according to the people, who declined to be identified because the circumstances haven’t been disclosed.
As of mid-December, some executives gauge the loss to be in the $1 billion range, the people said, noting that the figure may be smaller by the end of the quarter, and cushioned by gains in other units.
Deutsche Bank, Europe’s biggest investment bank, posted a profit of €435 million ($579 million) last quarter after suffering losses of €1.26 billion on proprietary credit and equity trades.
The worst financial crisis since the Great Depression exacerbated losses on trades involving convertible bonds and securities hedged with credit default swaps, particularly after Lehman Brothers’s bankruptcy in September. Deutsche Bank, led by Chief Executive Officer Josef Ackermann, said last month that the operating environment had “significantly deteriorated”.
“Trading in the fourth quarter is going to be bad because after the Lehman collapse all hell broke loose,” said Dirk Becker, a Frankfurt-based analyst at Kepler Capital Markets.