The Wall Street Journal-20080128-Commerzbank Unit Sees Write-Downs

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Commerzbank Unit Sees Write-Downs

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German mortgage bank Eurohypo AG, a unit of Commerzbank AG, expects further write-downs in the fourth quarter related to the U.S. subprime-mortgage market to be lower than in the previous quarter, Chief Executive Bernd Knobloch said.

Eurohypo, which specializes in commercial real-estate financing and public-finance business, marked down the value of its U.S. investment by 128 million euros ($187.8 million) in the third quarter.

The comments follow a slew of statements from German banks aimed at soothing investor fears that they might issue substantial profit warnings. Nonetheless, due to continued turbulence in financial markets that could result in a weaker economy, Eurohypo expects new business this year to be "somewhat subdued" compared with 2007, Mr. Knobloch said.

The statement comes against the background of the global financial crisis, triggered this past summer by ratings downgrades in the U.S. subprime sector.