Jobs warning at Deutsche Bank

DEUTSCHE BANK, Germany's biggest, yesterday blamed slightly lower profits on the strong mark and warned that jobs would have to go next year in an attempt to contain rising costs.

The bank has already shed more than 1,000 of its 71,400 workers this year and recently admitted it expected to make further redundancies in eastern Germany.

Hilmar Kopper, chairman, said yesterday that staff numbers could shrink by a similar amount next year, but promised that reductions would be achieved through natural wastage.

Movements in exchange rates were mainly responsible for the slight fall in the bank's group operating profits, which dropped by 0.8 per cent in the first 10 months of this year, to DM4.94bn (pounds 1.98bn).

Nearly half of Deutsche Bank's total assets, which include Morgan Grenfell, the British merchant bank, are outside Germany. Its reported profits have shrunk as the mark has strengthened after the recent turmoil in the European exchange rate mechanism.

Over the past few months the mark has risen by more than 4 per cent against the ecu, the basket of European currencies, while against sterling it has appreciated by more than 11 per cent.

But analysts said sluggish revenues and rising costs, which increased by more than 5.6 per cent, were also to blame.

Sarah Manton, an analyst with Robert Fleming Securities, said: 'Deutsche Bank's costs are rising faster than its revenues. While other German banks have also had higher costs, their revenue growth has been faster.'

On Monday, Dresdner Bank, Germany's second-largest, and Bayerische Vereinsbank reported profits up 16 per cent and 20 per cent respectively.

Ms Manton attributed Deutsche's slower revenue growth to its tendency, as Germany's most important banking group, to feel that it had to have a presence in less profitable areas such as interbank dealing.

With its diversity of shareholders there was less pressure on it to perform than on other German banks, she added.

While Deutsche's balance sheet is strong, the bank, like many others in Germany, is expecting higher bad debt provisions next year and expects only moderate growth in 1993.

Mr Kopper said the bank saw no need to raise this year's dividend, a comment that helped to weaken the share price, which dropped DM13.9 to DM653.1 in Frankfurt.