Deutsche writes down 2.7bn euros

Deutsche Bank has written down another 2.7bn euros ($3.6bn; £1.8bn) between April and June, taking its credit crunch bill to more than 7bn euros.

Unlike many of its global rivals, Deutsche Bank managed to make a profit in the quarter even after the problems.

Pre-tax profits came in at 642m euros, well down on the 2.7bn euros it made in the same period a year earlier.

Almost half of the write-downs were caused by investments in assets that were backed by residential mortgages.

Exposure to monoline insurers, which guarantee the repayment of a bond if its issuer is unable to do so, as well as under-performing investments in commercial property, made up much of the rest of the write-downs.

"The second quarter of 2008 proved to be another very challenging quarter for the banking industry," said chief executive Josef Ackermann.

"We remain cautious for the remainder of 2008."

The credit crunch began in the US where it was sparked by record defaults on sub-prime mortgages. Sub-prime lenders provide financing to people with poor or non-existent credit histories.

It later emerged that many European banks had bought repackaged bundles of debts which were linked to US residential mortgages.

Some of the European banks have now been hit as hard as their US counterparts in terms of losses from the credit crunch.

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