Deutsche Bank AG, Germany's biggest bank, will write down a record 2.5 billion euros ($3.9 billion) in loans and asset-backed securities as contagion from the subprime-market collapse spreads to Europe's largest financial companies. ``Conditions have become significantly more challenging during the last few weeks,'' the Frankfurt-based bank said today. Deutsche Bank will cut the value of leveraged-buyout and commercial real-estate loans and residential mortgage-backed securities. Deutsche Bank, which increased profit last year as it skirted the worst of the subprime meltdown, said a week ago its 2008 pretax profit target is under threat. Swiss rival UBS AG announced today Chairman Marcel Ospel will step down after reporting an additional $19 billion of writedowns. ``The subprime crisis is catching up to Deutsche Bank,'' said Konrad Becker, a Munich-based analyst at Merck Finck & Co. who recommends holding the shares. ``This means that Deutsche Bank is at risk of reporting a first-quarter pretax loss, and the full-year target is obsolete.'' Deutsche Bank rose 1.4 percent to 72.73 euros at 11:17 a.m. in Frankfurt trading, and has dropped 19 percent this year. The 60-member Bloomberg Europe Banks and Financial Services Index gained 2.2 percent, cutting this year's decline to 16 percent. Chief Executive Officer Josef Ackermann, attending a banking conference in London today, wouldn't answer questions. Deutsche Bank spokesman Christian Streckert cited last week's annual report when asked today about the 2008 pretax profit forecast of 8.4 billion euros, which excludes one-time effects. The bank on March 26 said writedowns and a worsening economy would ``adversely affect our ability to achieve our pretax profitability objective.'' ``The market was prepared,'' said Thomas Nagel, a Frankfurt-based trader at Equinet AG. ``Bank stocks could even being nearing a turnaround because the drops have been exaggerated.'' Deutsche Bank said today markdowns on assets backed by residential mortgages ``principally'' involve 7.91 billion euros of so-called ALT-A mortgages, which fall between subprime and prime. Credit-default swaps on Deutsche Bank rose 3 basis points to 100, according to CMA Datavision. The contracts traded as low as 8.5 basis points last year and as high as 155 basis points on March 17, according to data compiled by Bloomberg. A basis point on a credit-default swap contract protecting 10 million euros of debt from default for five years is equivalent to 1,000 euros a year. The German bank boosted profit 6.7 percent last year as the U.S. subprime collapse left Zurich-based UBS and Citigroup Inc. of New York with record losses. Deutsche Bank reported no net writedowns from debt holdings in the fourth quarter and marked down less than 50 million euros on loans for leveraged buyouts. The world's largest banks and securities firms have posted writedowns and credit losses of more than $208 billion since the beginning of 2007. Germany's financial regulator BaFin forecast such losses could reach as much as $600 billion. The German bank has been aiming to reach its 2008 target by offsetting a slowdown in investment banking with gains in consumer banking and money management. Ackermann has expanded what he called the ``stable businesses,'' helped by the purchase of German retail lenders Norisbank and Berliner Bank for 1.1 billion euros. __
