Deutsche calls off merger talks
5 February 2004, FRANKFURT - Germany's biggest bank, Deutsche Bank AG, announced Thursday a fourth-quarter net profit of EUR 436 million. In releasing the results, Deutsche said that it was planning to increase its dividend for 2003 by 15 percent to EUR 1.50 per share compared to EUR 1.30 in 2002 after a ruthless round of cost cutting and a pickup in global financial markets helped to boost earnings. "The year 2004 has started very well and we are confident that, if the world's economies and financial mark
5 February 2004
FRANKFURT - Germany's biggest bank, Deutsche Bank AG, announced Thursday a fourth-quarter net profit of EUR 436 million.
In releasing the results, Deutsche said that it was planning to increase its dividend for 2003 by 15 percent to EUR 1.50 per share compared to EUR 1.30 in 2002 after a ruthless round of cost cutting and a pickup in global financial markets helped to boost earnings.
"The year 2004 has started very well and we are confident that, if the world's economies and financial markets continue to develop positively, our growth objectives are achievable," said Deutsche chief Josef Ackermann, as Deutsche kicked off the annual German bank reporting season.
Deutsche's latest results came amid press reports that the bank had recently called off merger talks with rival Citigroup, with Ackermann apparently believing that such a deal would be impossible to follow through politically.
Speaking at a press conference following the release of the results, Ackermann stepped back from commenting on the talks with Citigroup.
But pointing to a series of US bank mergers, Ackermann said that this did not automatically mean that the European banking industry would follow suit at the same pace.
Thursday's Financial Times reported that Ackermann along with Michael Cohrs, Deutsche's global head of corporate finance met with senior Citigroup executives last month in New York.
According to reports Citigroup had even approached German Chancellor Gerhard Schroeder to check whether his government would block a foreign takeover of his nation's biggest bank.
Indeed, the German banking industry has been awash with rumours that a takeover or merger was on the horizon with Hypovereinsbank AG and Commerzbank AG (Germany's second and third biggest banks respectably) having also been seen as possible targets in the widely predicted and long-awaited consolidation of the German banking market.
But casting something of a shadow over Deutsche's otherwise solid financial performance is a legal battle facing the bank's chief executive Josef Ackermann, which analysts fear could result in distracting Ackermann from his restructuring of the bank.
Along with five other former directors of the German Mannesmann group, Ackermann is facing charges in a Duesseldorf court stemming from the approval of more than EUR 57 million in payments to Mannesmann executives in the final days of its 2000 takeover battle with the global mobile phone group, Vodafone.
Ackermann is due back in court Friday for the case, which is expected to run for about six months.
At the same time, Deutsche has found itself embroiled in the corporate scandal surrounding the Italian dairy products group Parmalat with Italian police last month launching a raid of Deutsche's Milan offices. This follows a bond issue placed by the bank for Parmalat in September.
The release of the Deutsche Bank results follows a raft of solid 2003 earnings from Europe's big banks and coincided with the publication of results for BNP Paribas SA, which has showed net profit at France's biggest bank rising by 7 percent last year on the back of a strong performance by its investment banking division.
Deutsche's latest earnings were also in line with analysts' forecast with the bank unveiling a full year net-profit for 2003 of EUR 1.4 billion and a pre-tax profit for the year of EUR 2.8 million.
A weak economy and ballooning loan-loss provisions have also taken their toll on the German banks' results in recent years.
But Deutsche said Thursday that it had slashed its loan-loss provisions by almost half last year to EUR 1.1 billion from EUR 2.1 billion in 2002 with operating expenses falling in 2003 by 11 percent to EUR 17.3 billion.
Ackermann has been pushing forward with a major restructuring of the bank, which has resulted in the bank reducing its workforce by about 15,000 in recent years and hiving off about 14 billion euros in assets as he refocuses the bank on its core activities.
Deutsche's key corporate and investment banking operations posted a fourth-quarter pre-tax profit of EUR 453 million. Investment banking represents about three-quarters of the bank's earnings.
Further reflecting the positive impact on the bank's balance sheet of the recent upswing in world markets, Deutsche said its fourth- quarter trading income jumped 27 percent from the previous quarter to EUR 1.2 billion. This resulted in full-year trading income rising to EUR 5.45 billion compared to the 2002 figure of EUR 4 billion.
Subject: German news