Big European banks lead round of profit warnings
Some of Europe’s biggest banks have delivered yet more bad news to investors with Deutsche Bank leading a round of profit warnings — the result both of a collapse in eurozone trading activity and ever steeper funding costs.
Josef Ackermann, Deutsche chief executive, revealed the bank had abandoned a 10bn euro ($13bn) pre-tax profit target for 2011, due to a “significantly lower than expected” result at its investment bank in the three months to end-September, sending the group’s shares down 4 per cent to 24.64 euro. He also announced 500 job cuts.
Swiss bank UBS, which saw its chief executive resign 10 days ago in the wake of a 2.3bn euro ($3bn) rogue trading scandal, indicated its underlying results would be weaker than expected. It promised a “modest net profit” for the third quarter of the year, but only after benefiting from a SFr1.5bn ($1.6bn) accounting boost from the depressed value of its own debt and SFr700m of treasury gains.
Stephen Hester, Royal Bank of Scotland’s chief executive, struck a less definitive note, but also said he was “reviewing investor return targets”. Bank executives said RBS’s 15 per cent return on equity target was likely to be lowered next year once the reformed regulatory environment was clearer.
The warnings from the banks, which were among those addressing a Bank of America Merrill Lynch banking conference in London, are likely to mark the start of a broader pattern as lenders struggle to cope with expensive, or non-existent, funding, while investment banking
Be the first to comment.