Deutsche Bank (DBKGn.DE) shares tumbled on Monday following a surprise fourth-quarter loss due to a steep drop in debt trading revenues and heavy litigation and restructuring costs that prompted the bank to warn of a challenging 2014.
Germany’s biggest bank said revenue at its important debt-trading division, fell 31 percent in the quarter, a much bigger drop than at U.S. rivals, which have also suffered from sluggish fixed-income trading. Deutsche’s bond trading business is one of its biggest and contributed 73 percent of total trading revenue in 2013, the bank said.
The unexpected loss is likely to compound problems that have dogged the bank over the past year, which include a list of lawsuits and regulatory wrangles. It will also increase pressure on co-chief executives Anshu Jain and Juergen Fitschen to overhaul the group, including pushing through a culture change.
Deutsche’s bond trading slump highlights the impact of a debt market slowdown in anticipation of an end to the U.S. Federal Reserve’s bond buying to help the U.S. economy.
But bond trading revenues at other big investment banks have not fallen as sharply as at Deutsche. At Goldman Sachs (GS.N) and Citi (C.N), for example, revenue from bond trading fell 11 percent and 15 percent respectively in the fourth quarter.
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