Deutsche Bank was supposed to report a loss in the third quarter.
By Daniel at 30 October, 2008, 11:04 am
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But the Frankfurt giant managed to turn a third-quarter profit of $575 million, and that’s because it took advantage of a new European Union accounting change.
Deutsche Bank was able to shift 825 million euros, or roughly $1.1 billion, in assets before tax to its loan bank from its trading book — meaning that it doesn’t have to take a write-off on the mark-to-market value of those securities, whatever they were.
Certainly, Deutsche Bank shouldn’t be criticized for doing so. They weren’t just taking advantage of some loophole — the rule change was actively designed for banks to shift assets around.
And lest the Europeans come in for a barrage of criticism, it’s worth noting that many want the Financial Accounting Standards Board and the Securities and Exchange Commission to adopt a similar stance.
But the “new” accounting from Deutsche Bank, and what its peers will likely copy, will further erode whatever little CONFIDENCE is left in the accounting standards of financials.
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