The chief executive of Germany's largest bank sent the country's stocks into retreat yesterday after predicting that troubles in monoline insurers could be a “tsunami” comparable to last year's sub-prime mortgage crisis.

Josef Ackermann, chief executive of Deutsche Bank, said that recent downgrades of the ratings of monolines, which provide bond insurance around the world, could have a knock-on effect similar to the collapse of America's high-risk mortgage market last year.

“It could be a tsunami-like event comparable to sub-prime,” Mr Ackermann said. His comments sent a chill through shareholders and the DAX index closed down 113.79 at 6,733.72

However, shares in Deutsche Bank closed higher after the bank reported better than expected figures for the fourth quarter of 2007. Pre-tax profits fell by 25percent to about €1.4billion (£1.04billion), beating consensus expectations, and the bank avoided booking any further writedowns on its sub-prime-related investments. The shares closed up almost 1 per cent at €74.97, as investors expressed relief that Deutsche Bank appeared to have escapted the credit meltdown relatively unscathed.

In the third quarter Deutsche Bank wrote down €2.2billion of assets hit by the US sub-prime mortgage market collapse.

Mr Ackermann said: “Those trading businesses in which we reported losses in the third quarter produced a positive result in the fourth quarter.”

Mr Ackermann, who turned 60 yesterday, said that fourth-quarter writedowns on leveraged finance business would be no more than $50million. However, he refused to rule out further losses. “Uncertainty remains as to how large the impact of the turbulence will be on global economic growth over the next few months and what writedowns will still be necessary on the books of the banks concerned,” he said. Mr Ackermann said that he expected the financial sector to stay unsettled for another six to nine months.

Deutsche Bank's corporate and investment banking business's pre-tax profit fall 43 per cent to €669 million in the fourth quarter. Pre-tax profits of the global transaction banking business rose 45 per cent to €222 million.

The bank reported a rise in loan loss provisions from €131million to €329million, mainly to reflect an expected shortfall from a single client.

Mr Ackermann reaffirmed a 2008 pre-tax profit target of €8.4 billion.

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