For the first time in five years, the German bank reports a loss, blaming its $220 million Q1 shortfall on financial market conditions
Even the powerhouse of German banking, it seems, has not been able to escape the ongoing global financial crisis.
On Tuesday, Deutsche Bank announced that it was posting losses for the first time in five years. The Frankfurt-based bank, which is Germany's largest, said it had seen a loss of €141 million ($220 million) in the first quarter of 2008, compared to a profit of €2.1 billion in the same period last year.
Pretax earnings fell to a loss of €254 million, compared to a €3.2 billion profit in the first quarter of 2007, the bank added.
Deutsche Bank said it had been forced to write down €2.7 billion ($4.2 billion) in the value of assets, pushing it into its first loss since 2003.
"In the first quarter of this year, financial market conditions were the most difficult in recent memory. In the month of March pressure on the banking sector was more intense than at any time since the current credit downturn began," Chairman Josef Ackermann said Tuesday. "Inevitably this left its mark on Deutsche Bank's results." Ackermann recently said that markets by themselves would not be able to fix the financial crisis and called for governments to intervene.
The international banking system has been in turmoil since the US market for high risk, or subprime, mortgages collapsed in 2007. The crunch is continuing to have its effect on the German financial sector.
On Tuesday, Germany's IKB bank announced that it had lost €1 billion in the first half of its 2007/2008 financial year on the back of write-downs. The bank had to be bailed out last year because of its exposure to the US subprime market.
Meanwhile, the German insurance giant Allianz also said its profits were down significantly in the first quarter, dropping to €1.1 billion compared to €3.2 billion for the same period in 2007.
The Munich-based group said it was writing off €900 million worth of structured financial products at its Dresdner Bank unit. Chairman Helmut Perlet announced on Tuesday that Allianz was sticking to its targets for 2009 for now but added that "this will become harder, the longer the financial crisis lasts."