Deutsche Bank issued a surprise profit warning today after revealing losses of about €4.8 billion (£4.4 billion) in the last three months of 2008.

The largest German bank said that its fourth-quarter performance reflected “exceptional market conditions” that severely impacted the results of its sales and trading businesses.

The group, which expects to report an annual loss of €3.9 billion, said that the loss also owed to the bank trying to reduce exposure to risky assets and other derisking measures.

However, the group assured investors that its Tier 1 capital ratio, a measure of a bank's financial health, would remain within the region of its 10 per cent target and that it planned a dividend of €0.50 a share for 2008.

Josef Ackermann, the chairman, said that the management of the bank was "very disappointed" at the fourth-quarter result, acknowledging that the "exceptionally difficult market environment" had exposed some "weaknesses" in its platform.

In mid-morning trading Deutsche’s shares fell by 6.6 per cent to €22.67.

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