Deutsche Bank writedowns swell beyond $11 bln

Deutsche Bank AG announced fresh writedowns on Thursday, taking its bill from the global financial crisis beyond $11 bln.
Germany's flagship financier had originally been seen as one of the few to emerge unscathed from the crisis, but as the problems on global markets continue Deutsche Bank is being sucked ever deeper into trouble.
The group's pretax profit collapsed in the second quarter to 642 mln euros ($1 bln) — a fraction of the 2.7 bln euros it made a year earlier — as writedowns ate into its bottom line.
Deutsche listed its latest injuries from the global crisis, saying it made 1 bln euros of writedowns in residential mortgage-backed securities and a further 500 mln euros linked to monoline insurers which insure against bond defaults.
Commercial real estate investments cost it 300 mln.
Its bill from the turmoil, while modest compared to Swiss rival UBS AG, has overtaken that of its Zurich-based competitor Credit Suisse Group AG, which has made about $8 bln of writedowns.
The extra damage in the second quarter, however, had been broadly expected and Deutsche's shares were just 0.4% lower at 0724 GMT, in line with European rivals.
"We remain cautious for the remainder of 2008," said Chief Executive Josef Ackermann, who also chairs top global banking group the Institute of International Finance.
His remarks contrast with his bullish statements of the past. As late as last November, Ackermann signaled he saw no further writedowns and stood by his goal of making a pretax profit of 8.4 bln euros this year, a target that has since been quietly dropped.
So far this year, the bank has made roughly 400 mln euros.
Konrad Becker, an analyst with Merck Finck, said: "the writedowns are the decisive point and show that the crisis lingers … But the results, if you look at costs and interest income, for example, are better than expected."
Deutsche's wage bill fell by almost one third to almost 2.7 bln euros in the second quarter as bonus payouts fell.