The announcement sent Deutsche Bank shares into a tailspin on the Frankfurt stock exchange, where they were among the biggest losers, shedding €1.56 or 6.1 percent to reach €24.18 in a sharply weaker market.
Markets in general were also suffering on the news. By about 2 p.m. the DAX, the index of Germany’s 30 leading blue-chip companies was down 3.8 percent to 5171 points.
In face of “ongoing market turbulence, our planned pre-tax target of €10 billion ($13.2 billion) from our core businesses is no longer achievable for 2011,” Deutsche Bank said in a statement.
The “intensifying European sovereign debt crisis led to sustained uncertainties among market participants in the third quarter and thus to significantly reduced volumes and revenues,” in particular for Deutsche Bank’s corporate banking and securities business, chief executive Josef Ackermann told an investors’ conference in London.
“In response to the significant and unabated slowdown in client activity, Deutsche Bank will consider additional cost controls beyond those already implemented” at its corporate and investment banking division, Ackermann said.
“This will lead to a reduction in headcount by around 500 positions” in the division in the fourth quarter of this year and the first quarter of next year.
The job cuts would be implemented “primarily outside Germany,” he said.
Deutsche Bank said it would write off around €250 million ($330 million) on Greek sovereign debt in the third quarter.
“Nevertheless, we will be profitable in the third quarter and expect a robust earnings level for the full year 2011,” Ackermann said. “We are confident that the classic banking businesses – private clients, asset management and global transaction banking – as a whole will deliver their best pre-tax profit ever.”
Deutsche Bank would publish detailed third-quarter earnings on October 25, it said.