Deutsche Bank Racks Up Loss of $6.38 Billion

Deutsche Bank has racked up a loss of about 4.8 billion euros ($6.38 billion) in the final three months of 2008 alone, the bank said in a surprise profit warning on Wednesday that sent its shares tumbling.

The bank blamed troubled markets which ruined earnings at its sales and trading business, formerly the engine room of the one-time investment banking powerhouse.

In addition, it racked up losses trying to hive off risky exposure which Deutsche said now put it on track for a net loss of roughly 3.9 billion euros for last year.

The bank, originally seen as little affected by the crisis but which has been dragged ever deeper into the markets storm, said it planned a dividend of 50 cents per share for 2008.

Its Tier 1 ratio -- an important measure of a bank's financial health -- will be in the region of the targeted 10 percent at the end of 2008, the bank said.

Deutsche's shares were trading down 6.6 percent at 22.67 euros, a far steeper fall than the 1.6 percent slip seen among German blue-chips.

Deutsche Bank and Deutsche Post have agreed on new conditions regarding the takeover of Deutsche Postbank, two sources familiar with the negotiations said.

Deutsche Post will take a stake of less than 10 percent in Deutsche Bank for less than a year, the sources said on Wednesday.

Deutsche Bank will pay for Postbank in part with new shares and Deutsche Post will receive cash for Postbank earlier than planned as part of the new agreement, which is due to be announced on Wednesday pending approval by Deutsche Post's supervisory board.

The total value of the transaction remains unchanged, the sources said.

Deutsche Bank and Deutsche Post declined to comment.

Deutsche Bank shares were 9 percent lower, Deutsche Post down 2.5 percent and Deutsche Postbank 17.5 percent lower.

Deutsche Bank agreed to buy smaller retail rival Postbank in September, shortly before the collapse of Wall Street's Lehman Brothers sent markets and bank stock prices into a spin, casting uncertainty over the deal.

The original deal called for Germany's biggest bank to acquire Postbank in two stages in a deal worth up to $13 billion.

Deutsche has earlier said that it intends to complete the initial takeover of an almost 30 percent stake in Postbank, for which it is paying 2.8 billion euros ($3.72 billion), in the first quarter of this year.

Under the original deal, Deutsche had an option to buy a further 18 percent stake for 55 euros per share, which it can exercise between one and three years after the closing of the first stage.

It had the option to pay in stock rather than cash.

But if it does not trigger this option, Deutsche Post could force it to buy a stake of about 20 percent in Postbank for 42.80 euros.

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