EUR News

France's producer prices in November decreased less-than-expected from a year ago, data released by the statistical office INSEE showed on Friday.

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Spain's current account surplus in October increased from a year ago, helped mainly by improvements in the current transfers, services and goods trade balances, the Bank of Spain said on Friday.

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Eurozone inflation slowed unexpectedly at the end of the year and producer prices remained in negative territory for the fourth consecutive month, adding pressure on the central bank to act decisively to stem deflationary risks and support growth. The flash estimates from Eurostat on Tuesday showed that inflation slowed to 0.8 percent in December.

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German unemployment dropped unexpectedly in December, marking the first fall in five months, as firms sought to increase staff levels buoyed by the continued recovery of the Eurozone economy and improving domestic demand conditions. The number of unemployed persons fell by a seasonally adjusted 15,000 in December to 2.965 million, the latest data published by the Federal Labor Agency revealed.

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The European Central Bank left interest rates unchanged at a record low at the start of the year, as it battles deflationary tendencies, while a gradual recovery has become more evident in the 18-nation economy. The Governing Council kept the main refinancing rate unchanged at 0.25 percent on Thursday, for a second straight month, following their meeting in Frankfurt.

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Deutsche Bank Posts Euro1.2 Billion Fourth Quarter Pretax Loss

Deutsche Bank AG (DBK), Europe’s biggest investment bank by revenue, reported a surprise fourth-quarter loss, hurt by legal costs and accounting charges.

The bank had a pretax loss of 1.15 billion euros ($1.56 billion) on 528 million euros in litigation-related expenses, as well as costs tied to its reorganization and charges to adjust credit, debt and funding valuations, the Frankfurt-based firm said yesterday in a statement. The average estimate of six analysts surveyed by Bloomberg was for a 628.5 million-euro pretax profit. The bank announced results 10 days ahead of schedule.

Deutsche Bank is putting aside funds to settle probes and lawsuits that include allegations it deceived clients about products linked to U.S. mortgages and that its traders attempted to rig benchmark interest rates. The firm is spending money to improve controls, reduce headcount and move staff to cheaper locations as part of a plan to increase profitability.

“It is quite a messy result filled with legal and restructuring costs, which Deutsche would call as one-offs,” said Chad Padowitz, who oversees about $105 million in international equities as chief investment officer of Melbourne-based Wingate Asset Management. “The biggest challenge for Deutsche and its European counterparts is to find avenues for growth.”

Deutsche Bank Co-Chief Executive Officers Anshu Jain and Juergen Fitschen said in the statement they are “confident” the bank can reach targets they set for 2015.

Shares Lag

Last year “was the second successive year in which we have invested in the bank’s future growth and in further strengthening our controls while addressing legacy issues,” Jain, 51, and Fitschen, 65, said. “We expect 2014 to be a year of further challenges and disciplined implementation.”

Deutsche Bank gained 7.4 percent in Frankfurt trading over the past 12 months, lagging behind a 17 percent increase in the 44-company Bloomberg Europe Banks and Financial Services Index.

The bank reported a 3.17 billion-euro pretax loss for the fourth quarter of 2012 after writing down the value of businesses that failed to meet its revenue expectations, according to company filings. The firm’s profit in the third quarter of 2013 was almost wiped out after it added 1.2 billion euros to its reserves for legal expenses, the filings show.

“The management needs to show stability in the loan book, improve trading and investment banking income and produce clean numbers for the stock to gain momentum,” Wingate’s Padowitz said by phone today.
Legal Costs

Moody’s Investors Service lowered its outlook on Deutsche Bank’s credit rating to negative last month, saying the company’s plan to reorient its business and boost profitability has been hampered by rising litigation-related expenses.

Deutsche Bank had 2.3 billion euros set aside for legal costs at the end of December, down from 4.1 billion euros three months earlier. The company reached at least three settlements with regulators and clients last month, its filings show.

The bank agreed to pay U.S. financing companies Fannie Mae (FNMA) and Freddie Mac 1.4 billion euros to settle claims that it didn’t provide adequate disclosure about mortgage-backed securities. The European Commission fined Deutsche Bank 725 million euros on Dec. 4 for its part in rigging interest rates linked to the London interbank offered rate. The company said Dec. 19 that it reached a settlement to forfeit 221 million euros to end a derivatives contract with Italian bank Banca Monte dei Paschi di Siena SpA.

Belgium's business confidence rose in January, after declining slightly in the previous month, survey data from the National Bank of Belgium showed on Friday.

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Eurozone inflation slowed unexpectedly in January reflecting a fall in energy prices and added pressure on the central bank to take more actions to avoid the possibility of deflation in the 18-nation bloc. Nonetheless, the labor market showed unemployment in December declining at the biggest pace since April 2007.

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Final Purchasing Managers' survey results from Eurozone, Germany and France are due on Monday, headlining a light day for the European economic news.

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European Central Bank President Mario Draghi said on Thursday that the outlook for euro area inflation remains subdued due to a weaker economy and the bank is ready to consider all available instruments to tackle any money market volatility. The Governing Council decided to keep the main refinancing rate at a record low 0.25 percent for a third consecutive month.

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