Deutsche Bank shares slumped more than 4 per cent on Monday after Germany’s biggest bank announced a surprise fourth-quarter loss because of hefty legal and restructuring costs.

The Frankfurt-based bank posted a pre-tax loss of €1.15 billion ($1.56 billion) in the final three months of 2013 after it was forced to set aside €528 million for legal costs – bringing the total bill for the year to €2.5 billion.

“We expect 2014 to be a year of further challenges and disciplined implementation,” the bank’s co-chief executives, Juergen Fitschen and Anshu Jain, said in a preliminary statement released late on Sunday.

“However,” they said, “We are confident of reaching our 2015 targets and delivering on our strategic vision for Deutsche Bank.” The lender has found itself at the centre of a series of scandals and negative publicity in recent years.

Deutsche was fined $1.9 billion in the final quarter by the US authorities to settle claims arising from fraud allegations involving the sale of mortgage-backed securities in the run-up to the 2008 financial crisis.

It was also fined €725 million by European regulators for its involvement in manipulating benchmark London interbank interest rates.

In addition, the bank faced quarterly costs of €623 million for adjustments to the value of credit, as well as debt and funding expenses of €509 billion to meet restructuring expenses.

Third-quarter group revenue fell 16 per cent to €6.580 billion as a result of a weak performance of its corporate banking and securities division.

Still, the bank said it booked a profit before tax last year of €2.07 billion compared with the €315 million in 2012.

The group’s net profit climbed to €1.08 billion from €315 million in 2012. Litigation reserves stood at €2.3 billion at year’s end.

Deutsche Bank's shares dropped 4.14 per cent to €37.71 shortly after the opening of trading on the Frankfurt Stock Exchange. The bank’s stock has gained about 14 per cent over the last two weeks.

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