Deutsche Bank scarps profit target - - to cut 500 jobs; France and Belgium provide guarantees to Belgian bank Dexia

Πηγή: finfacts
Oct 4 2011


Deutsche Bank today announced that it had scrapped its profit forecast and announced 500 job cuts and further writedowns of Greek bond holdings amid a “significant and unabated slowdown in client activity” due to Europe's sovereign debt crisis. Meanwhile, France and Belgium today announced sovereign guarantees of deposits and debt of the embattled Dexia Bank, which is majority owned by the two countries and Luxembourg, following a bailout in 2008.

Deutsche Bank also said today that “costs relating to an indirect tax position” hit third-quarter results. Germany's biggest bank which had a target of €10bn in operating pretax earnings this year, still expects a profit for the quarter ended Sept. 30 and “robust” earnings for the full year, according to a statement today.

France and Belgium today announced they would guarantee loans made by Dexia after fears of a funding crisis at the Franco-Belgian bank sent its share price sliding.

The share price is off 21% despite the announcement.

François Baroin, French finance minister, and Didier Reynders, his Belgian counterpart, said in a joint statement that they their central banks would “take all measures necessary for the security of depositors and creditors. To this end, they pledge to guarantee financing raised by Dexia.”

Dexia SA, BNP Paribas SA and Société Générale SA are resisting pressure from regulators to accept more losses on their holdings of Greek government debt amid criticism they haven’t written down the bonds sufficiently, according to Bloomberg.

While most banks have marked their Greek debt to market prices, a fall of as much as 51%, France’s two biggest lenders and Belgium’s biggest by assets, cut the value of some holdings by 21%. While the practice, which doesn’t violate accounting rules, it may leave them vulnerable to bigger write-offs in the event of a default, or if European governments force banks to accept bigger losses than signaled in July.

The three would have about €3bn of extra losses if they took writedowns of 50%, data compiled by Bloomberg show.

On the markets the pan-European Stoxx 600 is down 3.44%.