EUROPE - Deutsche Bank AG's weak results for 2001 clearly demonstrate the need to ruthlessly address the group's unfavorable cost structure, which continues to be the group's Achilles heel, said Michael Zlotnik, managing director of Standard & Poor's financial services group in Frankfurt.
While the announced results will not have immediate rating implications, Standard & Poor's sees 2002 as a critical year for Deutsche Bank's rating.
We will watch developments very carefully during 2002. Deutsche Bank must deliver on its announced cost-cutting program, and demonstrate success in restructuring its underperforming private banking and asset management operations against the background of a persistent difficult operating environment. Failure to do so would have negative rating implications, Zlotnik added.
The announced restructuring measures are expected to reduce administrative expenses by about EUR2bn or 10% by 2003, and foresee a planned reduction of at least 9,200 staff until 2003, and the further downsizing of the bank's branch network.
For the full year, Deutsche Bank reported a net profit of EUR167m under US GAAP accounting rules. In the fourth quarter, Deutsche Bank (on a pro forma IAS basis) posted a EUR800m loss.
By Luke Clancy
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