Shares in Germany's Deutsche Bank fell sharply this morning after an unconfirmed report that it faced losses of up to €1.7 billion linked to the US sub-prime mortgage crisis.
A Reuters report cited sources close to Deutsche Bank bank as saying that it might see losses of up to €1.7 billion after a revaluation of underperforming loan packages.
The report said that in order to reduce potential losses the bank was trying to renegotiate some deals or asking customers to cancel others. A Deutsche Bank spokesman declined to comment.
The global banking system was hit by a credit crunch following the collapse of the US market for high-risk home loans, known also as the sub-prime market.
The loans had been repackaged and sold around the world as asset backed securities to institutional investors, and banks cut back on long-term lending to each other after the crisis broke.
On Thursday, Deutsche Bank chief Josef Ackermann acknowledged in a television interview that his bank had made mistakes along with others and expected its third quarter results to be affected by the financial market turbulence.
