Investors dumped shares in Royal Bank of Scotland and Barclays today as a profit warning from German giant Deutsche Bank cast a shadow over the UK bank reporting season.
Deutsche sank 5% after figures rushed out yesterday evening revealed fourth-quarter net losses of €965 million (£795 million). The firm was hit with legal and restructuring costs but a slowdown in debt trading did the damage at its investment banking division, where revenues were down 27% year on year. Trading was hit by the run-up to the US Federal Reserve’s decision to taper its quantitative easing bond-buying programme in December.
The focus immediately shifted to London, however, where Barclays and taxpayer-backed RBS — both with big fixed-income operations — were the FTSE 100’s biggest casualties. RBS was off 7.1p to 356.5p and Barclays 5.5p to 283p, both falls of 2%. ETX analyst Ishaq Siddiqi said: “Both have bulky fixed income trading operations which are not immune to the trend noted across the industry.”
Investec’s Ian Gordon said: “Deutsche compares unfavourably with the US banks. My forecast for Barclays’ fixed-income revenue is flat quarter on quarter and I haven’t changed my numbers, but there are risks to the downside.Outperformance on costs should make up for disappointment on revenues.”
