Germany's Deutsche Bank said in a surprise trading update Tuesday that it has suffered some impact from recent credit market problems, but said it hasn't made unsecured loans to hedge funds and that its margin calls are being met.
Chief Executive Josef Ackermann told a banking conference in Frankfurt that recent market turmoil had an impact on the bank's mark-to-market valuations, but insisted that it hadn't suffered problems with funding availability.
Deutsche Bank said there are signs the market is stabilizing.
Ackermann said the bank's earnings performance in the third quarter this year will be crucial in regaining market confidence.
A presentation given by Ackermann, which also appeared on the bank's Web site, said the bank considers business with hedge funds "a high priority client segment."
It said exposure to hedge funds is "fully collateralized and margin calls are being met," adding that the "types of acceptable collateral is governed by strict policies."
Moreover, he said, the bank's net exposure to hedge fund business is marked-to-market, while collateral is called on a daily basis."
Deutsche Bank said its total assets in ABCP conduits stand at 32 billion euros ($43.52 billion).
Deutsche Bank shares were higher by 3% following the statement.