Deutsche Bank Warns Of £4.6bn Financial Loss

Shares in Germany's biggest bank, Deutsche Bank, dived more than 3% on opening on Thursday after it warned of a third quarter loss of €6.2bn (£4.6bn).

The bank's statement blamed a writedown on the value of its investment banking division for the bulk of the vast sum.

It said it was also making a provision of €1.2bn (£900m) to cover legal costs arising from regulatory investigations and slashing the value of its 20% stake in China's Hua Xia Bank by €600m (£443m).

The share price fall was of little surprise given that Deutsche's management board said it had decided to recommend a reduction or cancellation of its dividend.

Stricter rules on how much money banks must have in reserve prompted the cut in value of the investment bank.

It has been reported that more than 20,000 jobs could be cut under a plan to restore profitability by new chief executive, John Cryan.

He took over in July following a period of turmoil for the bank and a record fine for Libor rate-rigging.

Deutsche, which employs more than 9,000 people in the UK, wants to cut its costs further to help account for the writedowns and penalties for past mistakes.

In a memo to staff, Mr Cryan said details of how the bank planned to implement its strategy would be outlined alongside its third quarter results at the end of October.

He also warned of an impact to pay in the memo: "While compensation considerations are not based on this year’s financial results alone, our shareholders will rightly expect employees to share something of the burden.

"Having said that, you have my personal commitment to try to achieve a fair balance between staff and shareholder interests.

"No decisions have been made on compensation and we will only make these once we have a better feel for the likely overall financial outcome for the bank for the full year."