Massive blow to major interbank FX player as Deutsche Bank estimates record loss of £4.4 billion in third quarter

Multinational financial giant Deutsche Bank AG (FRA:DBK) has announced that it will record a loss of £4.4 billion in the third quarter of this financial year, making that particular quarter representative of a record loss for the company. Even the most seasoned analysts were delivered a shocking forecast, as the majority had predicted a forecasted […]

Multinational financial giant Deutsche Bank AG (FRA:DBK) has announced that it will record a loss of £4.4 billion in the third quarter of this financial year, making that particular quarter representative of a record loss for the company.

Even the most seasoned analysts were delivered a shocking forecast, as the majority had predicted a forecasted profit of approximately 1 billion euros.

The bank has also taken a 600 million euro writedown on the value of its 20% interest in Chinese financial institution Hua Xia Bank, which has a value of approximately $3.5 billion and after ten years, it is looking to sell.

Paul Orford
Paul Orford

The company’s expectant loss may well equate to €6 billion but excluding impairment charges relating to higher capital requirements for the firm’s investment banking division and the decreased value of Postbank, the net loss would amount to €200 million.

Encumbent boss John Cryan is looking to shrink the workforce by a remarkable 23,000 to reduce costs and avoid having to seek further funding from shareholders.

FinanceFeeds spoke today to Paul Orford, VP of Business Development at TopFX who provided his viewpoint on the matter

Mr. Orford explained “One piece of news that has quietly slipped under the radar of the mainstream media has been the late night announcement that has left analysts aghast. Deutsche Bank, which is Germanys largest lender are reporting staggering potential losses of 6 BN Euro for the 3rd quarter”

“Insiders within the company have blamed huge impairment charges of around 5.8BN Euro for the unexpected loses they are looking to incur. Having gone from a forecasts of 1 BN Euro profit, this is seen as another piece of catastrophic news for Germany following the Volkswagen crisis” he continued.

“Having already having to set aside around 1.2 BN Euro to cover the Libor scandal, with further investigations to come in Switzerland for suspected price fixing in the precious metals market, it has not been a great year for the bank” – Paul Orford

Mr. Orford concluded by asking “With news like this, where does that leave the other banks? What are their balance sheets like? As we all understand from the previous crash the main problem was and still is contagion. If one of the global behemoths which are deemed ‘too big to fail’ banks goes down or becomes distressed, will we see crisis v2.0 on the horizon?”

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