Deutsche Bank Hit by Credit Crunch
Deutsche Bank shares fell Thursday after its CEO admitted that the bank has been hard hit by the recent global credit crunch.
Deutsche Bank CEO Josef Ackermann told German broadcaster ZDF that the bank had "made mistakes during this crisis" and admitted the bank's third-quarter results would suffer as a result.
The interview was due to be aired Thursday but the station made the transcript available beforehand, with the result that Deutsche Bank shares had fallen by 1 p.m. local time on Thursday. One trader told the news agency Reuters that the statement, which he said amounted to a "quasi-profit warning," was dragging the entire Frankfurt stock market down.
In the interview, Ackermann admitted that €29 billion ($40.5 billion) in credit agreements must now be reassessed as a result of the global credit crisis, which was triggered by a collapse in the US subprime mortgage sector. He did not specify how much the crisis would cost the bank, Germany's biggest, but said the main result would be a scrapping of plans to hire an extra 4,000 staff this year.
German banks have been among those worst hit by the subprime crisis. Two state-backed banks, IKB and SachsenLB have already had to be bailed out. SPIEGEL reported earlier this week that German investment funds and state-backed banks may also be hit by the problems at the British building society Northern Rock, itself a crunch casualty.