Deutsche holds hit to just £1.5 billion

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He expects clients to return to big high-quality banks rather than flirt with boutique operators.

Deutsche was hit by the US subprime mortgage collapse and its knock-on effects. But the write-downs it made in its third quarter at e2.2 billion (£1.5 billion) were less than the stock market had expected and exactly half the amount announced by Swiss rival UBS yesterday.

Ackermann said: "Looking ahead, challenges undoubtedly remain; however, this is also a time of opportunity. As a market leader in investment banking, and a major global asset gatherer, we stand to benefit from the flight to quality. We have forged deep client relationships, and while clients' priorities may change, our ability to act as trusted advisor and partner will remain.

"Our capital strength and well-diversified funding base are valuable competitive advantages. Strategically, our path is clear; we stay the course!"

Deutsche employees will not escape the credit crunch scot-free. The bank said they will get a total of e1 billion less than in the same quarter last year, when they shared e2.7 billion, mainly due to lower bonuses.

Pre-tax profits for the group fell 19% to e1.4 billion in the three months to the end of September while after tax they were actually 31% higher at e1.6 billion, reflecting various one-off property and investment sales.

But the corporate and investment banking division, which is largely based in London, saw net revenues drop e2.1 billion to e1.9 billion. This led to a collapse in its quarterly profit from

e1.1 billion to e85 million. This division is where bonus cuts are likely to fall most heavily.

Deutsche's target of making a 25% return on equity was missed in the third quarter when it fell to just 12%, but for the first nine months of the year the bank remains ahead of target at 29%.

Ackermann said the fourth quarter had started positively and, "assuming markets function at normal levels", he still expects the bank to hit its target of pre-tax profits of e8.4 billion in 2008.