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Deutsche And Merrill Latest Credit Victims

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A bit more on this:

Deutsche statement

"As the bank already communicated in a performance update on 4 September 2007, market conditions during the quarter impacted mark-to-market valuations in the leveraged loan and trading books. Deutsche Bank anticipates taking charges in the third quarter on leveraged loans and loan commitments (net of related fees) of up to EUR 700 million, in addition to charges taken on such loans and commitments during the second quarter, and of approximately EUR 1.5 billion on structured credit products, residential mortgage-backed securities and relative value trading in both credit and equities. Other businesses in Corporate Banking & Securities produced strong results for the quarter. However, due to the aforementioned charges, Corporate Banking & Securities as a whole is likely to report a net pre-tax loss in the quarter, currently estimated in the range of EUR 250 - 350 million."

Corporate Banking and Securities is the investment banking, City based part of the business. Looks like the bonuses might only stretch to a bottle of Tesco's sparkling wine this Christmas.

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http://afp.google.com/article/ALeqM5iFJ9SC...vE_ivsExCqxMiGA

Deutsche Bank reports 2.2-billion-euro costs from subprime crisis

1 day ago

FRANKFURT (AFP) — Deutsche Bank, Germany's biggest lender, said Wednesday it would take charges of roughly 2.2 billion euros (3.1 billion dollars) to cover losses connected with the US home-loan crisis.

But the bank, the latest major institution to disclose damages attributed to the meltdown in the US high-risk mortgage market, still expected net third-quarter profit to exceed 1.4 billion euros, chairman Josef Ackermann said.

He told an investor conference in London Deutsche Bank was also sticking to its full-year pre-tax profit target of 8.4 billion euros, barring any more market turmoil.

...

Citigroup said it expected a 60-percent drop in third-quarter profit due in part to failed mortgage investments, while UBS announced a hit of 4.0 billion Swiss francs (3.4 billion dollars, 2.4 billion euros).

These are big quarter losses. As STF says, the VI hope that bonuses will bolster demand for prime london property could be for naught. And I would laugh my t*ts off if that were to happen.

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Corporate Banking and Securities is the investment banking, City based part of the business. Looks like the bonuses might only stretch to a bottle of Tesco's sparkling wine this Christmas.

:

A spokesman for Downing Street was quoted as saying "the FSA assure us that the US sub-prime problem is contained".

ship-topper.jpg

Edited by ParticleMan

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These are big quarter losses. As STF says, the VI hope that bonuses will bolster demand for prime london property could be for naught. And I would laugh my t*ts off if that were to happen.

From what I can tell, they made about 5.8 billion Euros in their investment banking division during the whole of 2006. So far this year they have about 4bn.

So it all comes down to the last quarter and the credit markets - if the markets recover they will probably see bumper bonuses again, if things stay as they are or deteriorate I expect there will be low/no bonuses and redundancies all round.

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A bit more on this:

Deutsche statement

"As the bank already communicated in a performance update on 4 September 2007, market conditions during the quarter impacted mark-to-market valuations in the leveraged loan and trading books. Deutsche Bank anticipates taking charges in the third quarter on leveraged loans and loan commitments (net of related fees) of up to EUR 700 million, in addition to charges taken on such loans and commitments during the second quarter, and of approximately EUR 1.5 billion on structured credit products, residential mortgage-backed securities and relative value trading in both credit and equities. Other businesses in Corporate Banking & Securities produced strong results for the quarter. However, due to the aforementioned charges, Corporate Banking & Securities as a whole is likely to report a net pre-tax loss in the quarter, currently estimated in the range of EUR 250 - 350 million."

Corporate Banking and Securities is the investment banking, City based part of the business. Looks like the bonuses might only stretch to a bottle of Tesco's sparkling wine this Christmas.

Interesting that Deutsche Bank were one of the banks that was backing the subprime situation to get worse and for there to be a greater detrimental effect on MBS's and CDO's from about the middle of Q1. They have been writing higher quality loans (anecdotal) compared to other IB's. Are they trying to clear the dead wood off the books while others are still covering their exposure? Looks like it to me. If there are any banks that should come out of this in a healthier manner it is the ones that noticed the trend early and addressed it early.

I think that Citi, Bear and Barclays are going to be wishing that they got everything out on the table now instead of next quarter.

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http://business.timesonline.co.uk/tol/busi...icle2597011.ece

October 5, 2007

Merrill profit warning after $5bn credit hit

The investment bank Merrill Lynch is pushed into the red in the third quarter, wounded by the turmoil in the credit markets

Times Online and Agencies

Merrill Lynch expects to post a third-quarter loss after the credit crunch inflicted writedowns of about $5 billion (£2.45 billion), the investment bank announced today.

........

The investment bank is anticipating losses of up to 50c a share.

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October 5, 2007

Merrill profit warning after $5bn credit hit

The investment bank Merrill Lynch is pushed into the red in the third quarter, wounded by the turmoil in the credit markets

Times Online and Agencies

Merrill Lynch expects to post a third-quarter loss after the credit crunch inflicted writedowns of about $5 billion (£2.45 billion), the investment bank announced today.

........

The investment bank is anticipating losses of up to 50c a share.

I know someone who works for Merrill.

Merrill were privately hoping for the announcement to be less than 3 billion. Apparantly, things would be getting nasty quickly if it was greater than this.

It turns out it is greater, by some margin.

Merrill are also supposed to be "ahead of the herd" etc. This announcement follows sackings of some senior management.

That blood is just a thimblefull in a potential bucket load.

Edited by BubbleTurbo

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I know someone who works for Merrill.

Merrill were privately hoping for the announcement to be less than 3 billion. Apparantly, things would be getting nasty quickly if it was greater than this.

It turns out it is greater, by some margin.

Merrill are also supposed to be "ahead of the herd" etc. This announcement follows sackings of some senior management.

That blood is just a thimblefull in a potential bucket load.

Turns out the loss was about $5bn relating to loan write offs (although this will be netted off against normal profits. This loss equates to 50c per share (current value c.$70).

High profile sackings, but the CEO has not taken responsibility, instead getting rid of the head of investment banking and the head of markets. If the CEO is not to blame, what the hell is he doing as CEO of a large investment bank?

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