Posted on 08/01/2002 8:06:16 PM PDT by DeaconBenjamin
Fresh layoffs after bad loans, fee blight ravage operating profit at HVB, Deutsche and Dresdner
FRANKFURT. A rash of loan defaults, along with lackluster commission and trading profits, pounded the second-quarter operating earnings of Germany's two largest banks, although sales of assets rescued the bottom line. Market-leading Deutsche Bank, which did not reveal its operating result, showed a solid pretax gain Thursday for the April-June quarter only after selling large stakeholdings and dipping into other assets. Second-ranked Hypovereinsbank last week had chalked up an operating loss for the same quarter.
On Thursday, Dresdner Bank announced it would lay off another 3,000 employees, bringing this year's total up to 10,800, almost 22 percent of its workforce. The day before, insurer Allianz had blamed its euros 350 million ($344 million) operating loss for the second quarter on the dismal performance of its Dresdner Bank subsidiary, Germany's No. 3 private-sector bank. The insurer's share plunged.
HVB's quarterly tally had forced the Munich mixed mortgage bank to write off its modest earnings hopes for 2002, also driving its share down. “We are moving through the most difficult banking year since the end of the war,“ HVB Chairman Albrecht Schmidt said in announcing HVB's interim business outcome last week. “We won't be earning real money again until 2003.“
Deutsche Chairman Josef Ackermann advised shareholders to brace for more weakness in view of the situation on the financial markets and in the global economy. “The current market environment is a challenge for all of us,“ he said. Results from Dresdner and Commerzbank were still pending.
Deutsche Bank booked a pretax profit of euros 2.22 billion for the quarter, up from euros 1.64 billion in the year-earlier quarter, after including tax-free proceeds on sales of blocks of stock in Munich Re and Allianz. The euros 2 billion gain from those deals was augmented by euros 213 million arising from the swap of Deutsche Herold for Scudder investment funds, prompting a few analysts to calculate that the bank may have started with a small operating loss. The bank, however, published an adjusted profit before tax of euros 913 million.
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