Deutsche Bank has beaten forecasts to report a €256 million profit for Q3 2016 as the threat of a $14 billion fine in the US continues to loom.
Many had predicted losses in the hundreds of millions euro, but revenue was slightly up year-over-year to €7.5 billion, despite a tough interest rate environment.
CEO John Cryan said: “The results for the quarter demonstrate well the strengths of our operating businesses and the outstanding work of our people. We continued to make good progress on restructuring the bank.”
“However, in the past several weeks these positive developments were overshadowed by the attention around our negotiations concerning the residential mortgage-backed securities matter in the US. This had an unsettling effect. The bank is working hard on achieving a resolution of this issue as soon as possible.”
US regulators are demanding $14 billion from Deutsche Bank for its alleged part in the mortgage-backed securities crisis.
It is working to have the fine reduced but fears that the bank will fail to negotiate a reduction, coupled with the belief that its capital base will not cover the cost, has damaged investor confidence and caused its share price to plunge.
Deutsche Bank is continuing to embark on its Strategy 2020, a plan it outlined in November last year that is designed to tackle its cost base.
The bank plans to cut 9,000 full-time positions and 6,000 external contractor positions, as well as remove onshore operations in Argentina, Chile, Mexico, Peru, Uruguay, Denmark, Finland, Norway, Malta and New Zealand.
Deutsche Bank has entered into an agreement to sell its subsidiaries in Mexico to InvestaBank, Institución de Banca for an undisclosed sum.
The bank will centralise its Mexican global markets and corporate and investment banking coverage function in its global hubs once Deutsche Bank Mexico and Deutsche Securities are off its books.
“Only two months after announcing the sale of our Argentina subsidiary, we are pleased to mark another major milestone in simplifying our bank by selling our subsidiaries in Mexico as part of Strategy 2020,” said Karl von Rohr, chief administrative officer at Deutsche Bank.
“We will work in partnership with our clients, regulators, employees and other stakeholders to ensure a smooth transition to the new arrangements.”
The transaction is expected to close in 2017, subject to regulatory approvals and other customary conditions.
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