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TheStreet Open House

News Roundup: Massive Deutsche Bank Loss

Stocks in this article: DB

NEW YORK (TheStreet) -- German powerhouse Deutsche Bank (DB) was humbled on Sunday as it announced that it had lost 1.15 billion euros for the fourth quarter, or about $1.5 billion. The bank chalked the loss up to risky investments (or, as the report described them, "de-risking activities"), litigation charges and the upcoming sale of BHF.

In an unusual move, the bank released its earnings statement 10 days early, on an American holiday weekend.

In after-hours trading, Deutsche Bank stock fell 1.4% from Friday's close at $52.27 to a low of $51.52 per share. Despite the bad news, the stock is still not far from its 52-week high of $54.49, which it hit just last week. Year to date, the stock is up 8.35% as of Friday's close. Over the past 52 weeks, it is up 6.61%.

Before the Deutsche Bank results, analysts had embraced the stock. Thomson Reuters listed 23 out of 26 analyst reports as being buy or strong buy. Some analysts maintain that the news will not negatively impact the stock. The bank is listed on both the New York Stock Exchange and the Frankfurt Stock Exchange (FWB:DBK).

In the earnings release, Deutsche Bank's co-CEOs Jurgen Fitschen and Anshu Jain admitted, "We expect 2014 to be a year of further challenges and disciplined implementation." The company claims that it will be back on track for 2015.

The loss was unexpected, noted of BloombergBusinessweek. Legal costs, reduced investment banking revenue and shrinking market share have hurt the bottom line.

In December, the bank bowed to a fine from the U.S. Federal Housing Finance Agency for $1.9 billion. As Tom Braithwaite and Alice Ross of the Financial Times reported, Deutsche Bank's litigation reserves are being drained by this settlement as well as legal battles over the estate of Leo Kirch, the Libor-fixing scandal, and the manipulation of the yen Libor and Euribor. The newly reported loss has tested the nerves of major shareholders.

Thomas Atkins of Reuters noted that the bank was cutting back on global bond trading in an attempt to become more profitable.

The Wall Street Journal's Andrew Peaple suggested that the company's struggles were making shareholders impatient with Deutsche Bank's leadership. And WSJ's Ulrike Dauer, David Enrich and Eyk Henning said that Deutsche Bank's losses could be a "harbinger" for the banking sector.

The surprise earnings have been a trending topic on Twitter, too. TheStreet's Cherella Cox found several Twitter posters trying to figure out how to trade on the news.

Overall, European shares closed flat on Monday.

Nora Morrison is a researcher, writer and editor on music, popular culture, and business topics. She is on Twitter at No Ticker.

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