Shares in Deutsche Bank dropped yesterday amid concerns the bank would have to make large writedowns in the value of its credit portfolio because of the market turmoil in the third quarter.

Bank analysts are preparing for a potentially sharp writedown in revenues from Deutsche Bank's fixed-income business, which has been the biggest profit contributor in the past.

"Deutsche Bank will undoubtedly have to take a hit in the quarter, probably between €1 billion and €2 billion," said one bank analyst who declined to be named.

He said fixed-income revenues at Deutsche Bank would probably fall significantly because of the weaker markets.

The bank said on September 4th its investment banking business had taken an "inevitable" hit from the turmoil in the credit markets that would affect its third-quarter results.

The bank has €29 billion of leveraged loans to financial sponsors on its balance sheet, which it would normally have sold on to investors, but the liquidity squeeze means they are stuck on its books, which has raised questions about how those positions are valued.

Josef Ackermann, chief executive, has called on all banks to reveal the full extent of losses from the credit market crisis in third-quarter results in order to restore investor confidence.

"The crucial question is, how do you mark the positions? I can only hope that we do not muddle through - that we mark them to market," Mr Ackermann said this month.

As the quarter draws to a close, analysts are debating if Mr Ackermann's comments signalled the bank's weakness or strength.

Some argue the chief executive hopes to "flush out" weaker rivals, while others say Mr Ackermann wants to make sure all banks are doing the same because he knows Deutsche Bank will have to make a big provision.

Deutsche Bank declined to comment on a Reuters report which said the bank expected to write down its credit portfolio by €1.7 billion.

Such a provision could wipe out the bank's profit for the quarter.

Deutsche Bank dropped 1.8 per cent to €90.20 yesterday.