Germany’s Deutsche Bank AG on Wednesday said that it will not pay dividends this year and next year as it seeks to cut costs as part of a major business and management restructuring.
The Frankfurt-based lender said it hoped to resume paying dividends in 2017. It has paid a dividend every year since Germany’s postwar reconstruction, including throughout the 2008 to 2009 financial crisis.
The decision was made to help the bank meet new financial targets set for 2020, it said, which could only be achieved by withholding compensation for shareholders this year and next.
Deutsche Bank has been undergoing a massive shake-up after its former chief executives Anshu Jain and Juergen Fitschen resigned in June over a tangle of scandals and missed profit targets and were replaced by John Cryan.
Cryan is aiming to create a greater capital ratio — an indicator of strength and ability to withstand shocks — targeting a common equity Tier 1 capital ratio of 12.5 percent by 2018, compared with 11.4 percent at the end of June.
The bank is also seeking to cut expenses.
Deutsche Bank reported a 6.2 billion euro (US$7 billion) net loss in the third quarter, the largest three-month loss in at least a decade, as stricter capital requirements reduce the value of its investment bank and the firm reserved funds for legal costs.
Revenue from trading debt and currencies, the investment bank unit’s biggest component, rose to 20 percent to 1.73 billion euros last quarter, while equity trading revenue fell 19 percent to 588 million euros, the company said in a statement yesterday.
The bank is currently embroiled in about 6,000 different legal cases and was fined in May a record US$2.5 billion for its involvement in rigging interest rates.
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