Deutsche Bank's plan to become “the last man standing” in investment banking in Europe is working, the bank said on Tuesday, reporting a 16% year-on-year increase in quarterly pretax income. But the spectre of costly litigation and settlements cast a shadow over results, with the bank booking 470 million euros ($631 million) in litigation-related quarterly charges and topping up reserves for future litigation by 22% to 2.2 billion euros.
Deutsche Bank faces an array of investigations that ranges from allegations of manipulating the Libor benchmark rate to unfairly favouring some investors in so-called dark pools and has already paid more than 5 billion euros over the past two years in settlements and fines.In a new development, Deutsche Bank said it had received requests for information from regulators related to high frequency trading, and that it had been named as a defendant in class action complaints alleging violations of US securities laws related to high frequency trading.With the threat of fines and settlement costs looming, as well as European banking stress tests year, Germany's largest lender raised 8.5 billion euros in June to strengthen its balance sheet.
Deutsche Bank has come under heavy fire from US authorities in recent weeks, with regulators slamming the bank for shoddy financial reporting, which it is addressing in part by hiring 500 US staff.
“There is significant uncertainty as to the timing and size of potential impacts. Accordingly, actual litigation costs for the balance of fiscal year 2014 are unpredictable,” Deutsche Bank said in a presentation.
Investment banking earnings contributed the lion's share of pretax income of 917 million euros as revenue from Deutsche Bank's important debt trading operations held steady.
UBS settles German case, net rises
Geneva: Switzerland's biggest bank, UBS, reported Tuesday a 15% rise in second-quarter profit, driven by strong results from its core wealth management business and trimmed-down investment banking franchises despite a tough market environment. UBS said its net profit for the April-June period rose to 792 million Swiss francs ($876 million) from 690 million francs in the comparable period in 2013. The Zurich-based bank also said it had settled an investigation in Germany of charges that the bank aided German clients suspected of evading taxes. UBS made a