Dresdner Bank, the leading agent bank in Germany in every survey which Global Custodian has conducted, had a difficult year in 2001. Post-tax profits slumped from Euros 1.7 billion to just Euros 186 million. Revenues – aggregate net interest income, net commission income and net trading income – declined by 2 per cent, though the figures are somewhat distorted by the first-time application of IAS 39.Loan loss provisions were lifted to Euros 1.9 billion, mainly to take account of duff loans to American companies.
More worryingly, costs are still rising, albeit at a rate one third (5 percent) of the average annual increase of 15 percent in the last five years. By the end of 2001, roughly 4,000 jobs had disappeared, taking the bank over half way to its target of shedding 7,800 staff.
Another 183 branches were closed, reducing the total to 803 by the end of 2001. “It shows that the cost-cutting measures introduced in May 2000 and further intensified in 2001 are starting to take effect,” says the bank. “The turnaround has begun.” But an internal memorandum leaked to the Financial Times suggests that the axe will shortly fall again, hitting investment banking arm Dresdner Kleinwort Wasserstein particularly hard.