DealBook: Deutsche Bank to Miss Profit Goal

Alex Domanski/ReutersThe headquarters of Germany’s Deutsche Bank in Frankfurt.

FRANKFURT — Deutsche Bank, Germany’s biggest lender, joined a growing list of banks buffeted by the sovereign debt crisis on Tuesday, saying it would not meet its 2011 profit target owing to investor uncertainty and a loss from its Greek bond holdings.

The bank said in a statement that it would not be able to achieve its goal of a pretax profit of 10 billion euros ($13.2 billion) for 2011. The bank also said it would cut 500 investment banking jobs, most of them outside Germany.

“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,” Deutsche Bank said in a statement.

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The unit that includes investment banking was hardest hit by the turmoil, Deutsche Bank said. The financial firm said it would book a loss of 250 million euros from its holdings of Greek government bonds, reflecting their steep decline in value. Uncertainty caused by the sovereign debt crisis has also made investors reluctant to take risk, cutting into revenue that Deutsche Bank and other institutions like UBS make from trading.

Deutsche Bank’s profit warning came amid reports that Dexia, a bank based in Brussels, might be broken up because of its exposure to Greece. UBS said on Tuesday that it would make a small profit in the third quarter, despite a $2.3 billion loss from unauthorized trades that it discovered last month.

In addition, banks are under pressure from regulators to reduce their leverage, while corporations are refraining from activities like selling bonds that normally generate revenue for financial institutions. Deutsche Bank said it was seeing “a significant and unabated slowdown in client activity.”

Josef Ackermann, the Deutsche Bank chief executive, planned to discuss the outlook at an investors conference in London on Tuesday, the bank said.

Julia Werdigier in London contributed reporting.

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