* Litigation charges to rise by 600 mln euros
* Cites U.S. mortgage-related lawsuits, other probes
* 2012 pretax profit 600 mln euros less than reported
* Says dividend will remain unchanged
* Shares rise 2.3 percent
By Edward Taylor and Arno Schuetze
FRANKFURT, March 20 Deutsche Bank cut
its previously reported 2012 pretax profit by 600 million euros
($773 million) on Wednesday, hit by new charges related to
mortgage-related lawsuits and other regulatory investigations.
Europe's biggest bank by assets declined to lay out in
detail why it had increased litigation provisions to 2.4 billion
euros, forcing it to correct a Jan. 31 earnings report which
already showed the worst quarterly loss in four years.
Its shares rose as investors welcomed the efforts to put a
figure on the legal and regulatory exposure. The bank said its
dividend would not be affected.
Deutsche and several other lenders face a string of lawsuits
and investigations related to their role in selling bonds backed
by U.S. subprime mortgages.
Clients who bought the mortgage-backed securities from
Deutsche feel they were misled about the quality of the assets,
which rapidly lost value after the U.S. mortgage market
collapsed between 2006 and 2009.
Credit Suisse analysts estimated Deutsche Bank could face
litigation costs of $2.1 billion related to U.S. mortgages.
Legal steps taken against other lenders involved in
mortgage-related litigation forced Deutsche to revise its legal
provisions, sources familiar with the matter said.
The bank increased the provisions because it was more likely
that it would have to pay plaintiffs to settle similar disputes
and backdate the payments to 2012, the sources said.
In November, a U.S. judge rejected bids by Deutsche and
Goldman Sachs to dismiss a federal regulator's lawsuits
accusing them of misleading mortgage giants Fannie Mae
and Freddie Mac into buying billions of dollars of
INTERBANK RATE INVESTIGATIONS
The sources also linked Deutsche's higher provisions to
investigations of suspected manipulation of the interbank
lending rates Libor and Euribor and the increased likelihood of
fines by regulators.
"But a settlement with the authorities (on Libor and
Euribor) is not imminent," one of the people familiar with the
U.S. and British regulators have fined three banks to date -
RBS, Barclays and Switzerland's UBS -
a total of $2.6 billion for allowing traders to manipulate Libor
interbank rates in a global scam.
Germany's financial regulator has said it would pass
preliminary findings from a probe into suspected manipulation of
interbank lending rates to the German finance ministry by the
end of March.
After a supervisory board meeting on Tuesday, Deutsche Bank
cut its 2012 pretax income to 784 million euros and net profit
to 291 million euros.
The bank reaffirmed an 8.5 percent target for its equity
tier 1 capital ratio, a measure of its safety buffer for
potential loan defaults, for the end of March.
Deutsche Bank's shares were up 2.3 percent at 1256 GMT.
Kepler Capital Markets analyst Dirk Becker said there was some
relief among investors at Deutsche Bank's continued commitment
to underpinning its capital ratio.
Europe's banks are shedding risky assets to avoid having to
set aside extra capital.
In January, Deutsche Bank announced one-off charges of
almost $4 billion to adjust the valuations of risky assets in an
attempt to shrink its balance sheet.