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Deutsche Bank drama not an immediate threat to Indonesia: BI
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The bank's logo is pictured at its headquarters in Frankfurt, Germany, on Sept. 30. (AP/Michael Probst)
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eutsche Bank’s default and its litigation problems may pose a threat to the Indonesian financial market, but on a very limited scale as Europe’s biggest bank has shown progress in its debt restructuring program, an Indonesian central bank official has said.
According to data from the Financial Services Authority (OJK), Deutsche Bank manages 42 percent of custody funds in Indonesia, for both stocks and bonds. Its name is used to register almost a quarter of stocks traded in the country, or 24.5 percent of total market capitalization on the Indonesian Stock Exchange (IDX).
"There will be an effect as Deutsche Bank is a major custodian bank in Indonesia, but as they are making profits again, we do not have to worry so much," BI senior deputy governor Mirza Adityaswara said during the Indonesia Sharia Economic Festival in Surabaya on Thursday.
The bank posted 278 million Euros (US$303.15 million) in profit during the third quarter, debunking the market consensus that initially predicted another net loss. This will help the bank restructure its debt and face its litigation problems, according to Mirza.
After posting a net loss of 6.8 billion Euros in 2015, Deutsche Bank was punished with a $14 billion fine by the US Department of Justice (DoJ) for its misconduct in subprime mortgage sales a decade ago.
"Discussions with the DoJ are moving forward and we are working hard to achieve a resolution in this matter as soon as possible," Deutsche Bank CEO John Cryan said in a statement, on Thursday. (ags)
