Deutsche Bank shares plunge nine percent on Q4 losses

Shares in Deutsche Bank plunged more than nine percent on the stock exchange on Thursday

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Shares in Deutsche Bank plunged more than nine percent on the stock exchange on Thursday after Germany’s biggest lender said that litigation costs pushed it deep into the red at the end of last year.

Shares in Deutsche Bank plunged 9.5 percent to an intraday low of 16.03 euros in late morning trade, the biggest loser on the blue-chip DAX 30 index, which was itself showing a more modest loss of around 0.26 percent.

Late Wednesday, Deutsche Bank had said it expected an overall loss of 6.7 billion euros ($7.3 billion) for 2015 as a result of a total 12 billion euros in charges, nearly half of which were litigation costs.

Deutsche Bank is currently mired in a tangle of around 6,000 lawsuits.

In May, it was was fined a record $2.5 billion for its involvement in rigging interest rates.

It has also faced probes by Swiss authorities for suspected price fixing on the precious metals market, and US investigators have looked at its Moscow branch on suspicion of possible involvement in money-laundering.

The group’s new chief John Cryan has pledged a sweeping culture change within the bank, but investors are worried that the litigation costs will still hit profitability for years to come.

For Barclays analyst, Kiri Vijayarajah, it was Deutsche Bank’s poor fourth-quarter performance that was the main factor behind the plummet in the share price on Thursday.

“The charges are in line with expectations. But revenues and underlying profits are weaker than expected,” he said.

In the fourth quarter alone, Deutsche Bank said it expects a fourth-quarter loss of 2.1 billion euros, weighed down by “challenging market conditions.”

Andrew Lin of Societe Generale said that at 6.6 billion euros, fourth-quarter revenues were lower than consensus.

In addition to write-downs totalling 5.8 billion euros due to tougher regulations on capital requirements, Deutsche also took charges on assets such as its almost 20-percent stake in China’s Hua Xia Bank, pushing it deeper into the red.

The bank said its planned sale of the stake in the China-based bank is expected to close in the second quarter of 2016.

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