Chief financial officer of Deutsche Bank has said that he expects 2018 to be the first “clean” year for the bank as the lender continues to struggle with writedowns, litigation charges and restructuring costs, following a record loss for 2015.
“We are coming back from a humongous loss position, if we turn this around over the next two years – and we said that 2018 will be the first “clean” year, if we really make that work and achieve our targets, then I think this is a very attractive place to be,” Marcus Schenck told CNBC.
Deutsche Bank reported a fourth-quarter net loss of 2.1 billion euros and full-year net loss of 6.8 billion euros on Thursday, which followed a warning last week that it would post a 2015 net loss of approximately 6.7 billion euros ($7.3 billion).
The group announced major restructuring plans in October, reducing its workforce drastically and pulling out of 10 countries. The bank also wants to halve the amount of clients it has in its global markets and investment banking business.
“I knew this wasn’t going to be a walk in the park, but rather a multi-year journey where we need to turn around things.We have so many people in the bank that have been here for decades and there is a lot of vested interest to still make it work,” Schenck said.
“There will be some people that will give up and say, this is no longer the place for me, But I think the vast majority has the fighting spirit and sees the big reward that is out there in the end,” he added.
Shares in the lender were down around 3.7 percent in afternoon trading on Thursday as investors digested the results, adding to losses seen this year, with shares down around 24 percent.
This comes after global equity markets have had a very difficult start to 2016, amid China slowdown fears and oil price weakness, but Deutsche Bank’s performance is still worse than many of its investment banking peers.
Schenck said an Increase in volatility in market is not always necessarily negative for banks, as the investment banking divisions can quite often benefit from such conditions.
“In fact, we have seen some of that benefit in the first two/three weeks of this year, so I wouldn’t be so negative about that,” he told CNBC, adding that the renewed volatility had not made the bank question their current re-organizational strategy.
“In that sense we don’t have to think about a Plan B at this stage. I think where we at Deutsche Bank need to be careful is, this year, 2016 is very much impacted by a lot of restructuring activities and we need to do all those, always bearing in mind where our capital ratios stand and be sufficiently flexible on how we time actions,” he added.
The group reported a pre-tax loss of 1.15 billion euros for its investment banking business in the fourth quarter. Revenues in the investment banking unit were down 30 percent year-on-year as its bond trading business fell, reflecting a challenging trading environment and lower client activity, the bank said.
The investment bank suffered a 1.2 billion euro loss in the fourth quarter, with high regulatory and litigation costs contributing to the loss. The bank has also scrapped its 2015 and 2016 dividend.
John Cryan, Co-Chief Executive Officer, told the bank’s analysts call that board members would forgo their bonuses.
Cryan said in a statement: “In 2015 we made considerable progress on the implementation of our strategy. The much-needed decisions we took in the second half of the year contributed to a net loss for the fourth quarter and full year.”
“We are focused on 2016 and continue to work hard to clear up our legacy issues. Restructuring work and investment in our platform will continue throughout the year.”