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Pastimes : Clown-Free Zone... sorry, no clowns allowed

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From: ldo79	4/1/2008 10:16:10 PM
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Deutsche Bank reveals $2.5bn writedown James Wilson / Frankfurt April 02, 2008 Deutsche Bank will make writedowns of $2.5 billion in the first quarter of 2008 after further problems in key markets during March. “Conditions have become significantly more challenging during the last few weeks,” the bank said. Josef Ackermann, its chief executive, was due to talk about the difficult operating environment for the bank at an investor conference in London on Tuesday. The writedowns are more than were made by Deutsche in the whole of 2007 when the credit market turmoil started. Germany’s largest bank had said then it moved quickly to take defensive positions in its portfolios of subprime investments. Deutsche’s shares were up almost 2 per cent in mid-morning trading in Frankfurt. Deutsche’s losses are significantly less than those revealed today at UBS, where Marcel Ospel said he would step down as chairman of the Swiss bank. Deutsche said it expected its Tier 1 capital ratio, an important measure of its financial strength, to remain as targeted at between 8 and 9 per cent at the end of March. The latest writedowns relate to Deutsche’s book of leveraged loans as well as its exposure to commercial real estate — half of which is in the US — and residential mortgage backed securities, principally those known as Alt-A or less than prime quality. Deutsche surprised some observers last month when its annual report revealed a gross $9.8 billion of exposure at the end of 2007 to US residential mortgages, including almost $8 billion of Alt-A securities. Deutsche had already warned of expectations of fresh writedowns because of worsening credit markets and has acknowledged that 2008 is likely to be a difficult year for the bank. Analysts believe Deutsche has little chance of meeting a pre-tax profit target of $8.4 billion although the bank has not abandoned that target. Deutsche’s earnings are seen as vulnerable because a high percentage comes from fixed-income trading.Ackermann has been among the bankers calling for more transparency among institutions about their exposure to credit problems. The Institute for International Finance, the associations of banks and institutions chaired by Ackermann, is next week to present an interim report on how to restore confidence and address regulatory issues.

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