Dresdner Bank in the red

Click to follow
The Independent Online
DRESDNER BANK, Germany's third largest bank, slumped Dm56.6m (pounds 20m) into the red in the third quarter because of losses triggered by the August collapse in the Russian bond market and its investment in Long-Term Capital Management, the troubled hedge fund.

The bank, which bought Kleinwort Benson, the City merchant bank five years ago, had made more than Dm1.79bn in profits in the first half.

Although the results were much worse than the market had been led to expect, analysts welcomed the bank's decision to take big provisions now rather than prolonging the pain. Deutsche Bank, which reported its third quarter figures on Thursday, saw its profits slump to Dm70m but remained in the black.

Dresdner Bank doubled its loan loss provisions to Dm1.3bn in the quarter.

It has written off all of its Dm240m holding in LTCM, although the bank points out that this was balanced by the dividends it had received from its holding before the fund was forced to seek new capital in September.

"All risks foreseeable in the future have been covered including the crisis-hit regions of South East Asia and Russia," a Dresdner statement to shareholders said yesterday.

Of all the major European banks, Dresdner is one of the most heavily exposed to lending in Asia and Latin America and there has been concern that it had not adequately provisioned its risks.

The bank says that while the markets are still hard to predict, it is planning to hold its dividend at last year's level.

Figures for Dresdner Kleinwort Benson, the investment banking arm are not broken out at the quarterly stage.