Deutsche Bank cautioned investors that unexpected costs would be a drag on profit for the fiscal year. The bank said that the cost of overhauling a German retail banking unit and the declining value of certain securities could “have a significant negative impact on the bank’s earnings” during the last three months of the fiscal year. Stefan Krause, the bank’s chief financial officer, said, “This is not seen as a profit warning. This is a guidance.”
Deutsche Bank decided to update investors on the unanticipated costs, but the bank did not know what the amount of those expenses would be. Mr. Krause said, “The outcome is still open. But there will be quite a large amount of things to consider, which could be substantial and could lead to a loss.” The bank may need to record losses from debt or other securities that it owns. Some of the other costs relate to an overhaul of Deutsche Bank’s Postbank unit, a division that offers banking services from German post offices.
Deutsche Bank has been trying to revamp its businesses in the face of a sluggish market and is moving to reduce risk as new regulations begin to take effect over the next few years. The bank will focus on winding down investments outside its main businesses, forming a new unit to handle the tasks.
Prosecutors recently raided the company’s headquarters in a tax evasion investigation. Deutsche Bank disclosed that Mr. Krause and Jürgen Fitschen, a co-chief executive of the bank, were the focus of an investigation over the value-added tax on the trading of carbon emissions certificates. The inquiry resulted in raids by nearly 500 police officers, tax inspectors, and other officials at the bank’s Frankfurt headquarters, as well as offices and private homes in Düsseldorf and Berlin.
The two executives are subjects of the inquiry because they signed tax return documents. Mr. Krause took note of the investigation in a conference call with analysts, but did not address the accusations in detail. Mr. Krause said, “The criminal investigation is going on, and it is very difficult to predict when that will be over.” The bank is also among the institutions under investigation by US and European authorities over the possible manipulation of benchmark interest rates, like the London interbank offered rate (Libor). Deutsche Bank said it had set aside money for potential penalties related to the case.