Germany’s largest bank has warned it will post a record loss for the third quarter due to massive write-downs. The dividend for the year could be cancelled.

The new head of Deutsche Bank, John Cryan, is cleaning up, removing a lot of clutter from the balance sheet. The result is a third quarter loss in the region of six billion euro, Deutsche Bank revealed in a statement. Cryan is acting now to prepare the way for his ‘Strategy 2020’.

The background to the heavy losses is not just massive write-downs in investment banking and the private client business – both divisions face heavy losses. The bank also has to set aside a large sum for anticipated legal costs.

The dividend for 2015 could be cancelled or reduced, Deutsche Bank warns. Cryan, formerly chief financial officer at UBS, took over from the unfortunate Anshu Jain who had lost the trust of the large investors. They were unhappy because of low returns and the fact that there was no end in sight to the numerous scandals surrounding the bank.

Thinner but stronger

Jain set the new strategy in motion. At heart, it entails significant slimming down for the bank because Deutsche Bank can no longer afford such a huge balance sheet in times of stricter regulation. Postbank will be sold off, the rest of the private client business cut back, with the branches, and the investment bank will also end up thinner but hopefully stronger.

Thousands of jobs will be lost as a result of the financial crisis. Many details are still open. Cryan, who has been carrying out an intensive problem analysis over the past three months and personally taken many managers to task, now has to make the finishing touches to his strategy. He will present his decisions on October 29 – along with the final third quarter results, the bank said.

Rival Credit Suisse, also working on strategic weak points under a new boss, will be the first in the limelight when it announces its results and next moves a week beforehand.