Deutsche Bank writedowns swell beyond $11 billion

By John O'Donnell

FRANKFURT (Reuters) - Deutsche Bank AG (DBKGn.DE: Quote, Profile, Research, Stock Buzz) announced $3.6 billion of fresh writedowns on Thursday, taking its bill from the financial crisis beyond $11 billion and putting it among the top ten global casualties of the turmoil.

Germany's flagship financier had originally been seen as one of the few to emerge unscathed from the crisis, but as the problems on international markets continue Deutsche Bank is being sucked ever deeper into trouble.

The group's pretax profit collapsed in the second quarter to 642 million euros ($1 billion) -- a fraction of the 2.7 billion euros it made a year earlier -- as writedowns ate into its bottom line.

Deutsche listed its latest injuries, which included 1 billion euros of writedowns in residential mortgage-backed securities and a further 500 million euros linked to monoline insurers which insure against bond defaults. Commercial property investments cost another 300 million euros.

Its bill from the credit crisis has now overtaken that of rival Credit Suisse (CSGN.VX: Quote, Profile, Research, Stock Buzz), which has made about $8 billion of writedowns.

Some fear that Deutsche could be forced to make further writedowns. "There is a suspicion that there might be more to come," said one analyst, who asked not to be named.

He pointed to the fact that Deutsche had cut the book value of its 24 billion euro portfolio of leveraged loans by substantially less than Credit Suisse.

Deutsche would normally farm these loans out to other banks but they have become harder to sell after the credit squeeze and their value must be deflated to reflect this.  Continued...