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The fourth quarter results of Deutsche Bank will take a hit amounting to €1.5bn (£1.3bn) as it tries to wrangle with the corporate tax reforms of Donald Trump, the company said today, as it issued a warning on revenues.
The lender stated that the change, which reduces corporation tax from 35 percent to 21 percent, will drive it to record a “small full-year loss,” decreasing its common equity tier one ratio by ten basis points.
However, Deutsche Bank added that it does not anticipate a significant long-term impact.
Deutsche also said that the combined fourth quarter revenues in the company’s fixed income, equity and financing businesses were likely to drop by 22 percent below that of last year, forcing pre-tax income into the red.
However, despite the restructuring and litigation charges amounting to €500m, it said that the full-year income will still be in positive territory.
“This reflects the weak revenue environment, elevated adjusted costs currently anticipated to be broadly in line with the prior year period, and a loss on sale from the recently announced disposal of the Polish private and commercial bank business,” said Deutsche.
Shares in the struggling lender dropped by more than 4.6 percent on the news, which came one ay after the European Central Bank (ECB) increased its minimum capital requirements by over one percentage point to 10.65 percent, even though it said that its current common equity tier one ratio is 14.58 percent.
Deutsche is not the only company to admit to extra costs as it attempts to comply with the reforms of Donald Trump. Earlier this week, BP said that it would take a one-off hit amounting to $1.5bn (£1.1bn) from the said changes.