What's going on?

Deutsche Bank stock got hit on Thursday (-3.5%) after the company warned investors late on Wednesday that it made a �2 billion loss in the final quarter of 2015 � much worse than investors were expecting.

What does this mean?

Deutsche announced last year that it would seek to significantly decrease the size of its trading division and sell its retail bank, Deutsche Postbank. The actual operations of Deutsche were doing ok � but that changed in its most recent quarter when it lost money even on its day-to-day activities. And it increased (again) the money it is setting aside for restructuring and litigation (Deutsche takes the unfortunate prize for the most fined European bank since the financial crisis � and it�s far from over). Put these things together and you get your �2 billion loss. Also, it�s not helping the stock that the retail bank is probably worth less than Deutsche thought.

Why should I care?

The bigger picture: It�s tough being a European investment bank right now. As we�ve reported previously, Deutsche, Credit Suisse and Barclays are all in the midst of serious restructurings. In fact, Barclays announced big jobs cuts on Thursday as it retrenches from most markets outside of the US and UK. Given the reasonably good US bank earnings just announced, it�s further evidence that European banks are lagging behind their American peers. (On a more positive note: It looks like the Italian government might be stepping in to solve this week�s Monte Paschi crisis)

For the stock: One big concern is whether Deutsche needs to raise more capital (as Citigroup pointed out in a report). When banks lose a lot of money, they eventually need to replenish their funds. Capital raises (a.k.a. �rights issues�) dilute existing shareholders� stock and, therefore, are usually quite negative for the stock price � although, in theory, should set the bank up to successfully implement its future business strategy.