FRANKFURT â€" Deutsche Bank on Wednesday revised its 2012 profit sharply downward as it set aside more money to cover the potential cost of legal proceedings, in what appeared to be a response to the sums other banks have paid to settle accusations they colluded to rig benchmark interest rates.
Deutsche Bank, Germany’s largest lender, set aside an additional 600 million euros ($775 million) to cover legal problems and reduced its pretax profit for 2012 by the same amount. As a result, net profit for the year was 291 million euros, about 400 million euros less than the bank reported on Jan. 31.
The bank, based in Frankfurt, is among those suspected of manipulating the London interbank offered rate, or Libor, which is used to set the rates on trillions of dollars of variable rate mortgages and other loans.
In February, Royal Bank of Scotland agreed to pay American and British regulators $612 million to settle claims stemming from its role in manipulating rates. Last year, the Swiss bank UBS agreed to a $1.5 billion settlement and Barclays agreed to pay $450 million. The banks are also likely to face civil suits from people who paid more interest than they should have because of Libor manipulation.
In addition, Deutsche Bank faces numerous lawsuits related to its sales of mortgages and mortgage-related derivatives in the United States before the financial crisis. In a statement, the bank also cited those suits as a reason for setting aside more money.
In total, the bank has now set aside 2.4 billion euros to cover possible judgments and other litigation costs.
Deutsche Bank was one of the few large German banks to avoid taking a direct government bailout during the financial crisis, and it is the only German bank able to compete in the same league as large American and British investment banks.
But Deutsche Bank continues to struggle with a daunting array of legal proceedings and official inquiries related to its behavior during the boom years. The bank’s co-chief executives, Anshu Jain and Jürgen Fitschen, have cut back on bonuses and taken other steps they say will discourage excessive risk-taking and unethical or illegal behavior in the future.
The bank said it would still pay a dividend of 75 euro cents a share, as announced in January.
