Deutsche Bank shares are swinging violently as the bank warns of huge losses

Shares in Deutsche Bank, mainland Europe's biggest investment bank, are swinging violently on news that it expects to book a third-quarter loss of €6.2 billion (£4.5 billion) on higher legal costs and a lower valuation for its Postbank unit.

CEO John Cryan said the bank may be forced to scrap its year-end dividend and that staff bonuses may also be hit. The full third-quarter results will be published on October 29.

The shares, which had been off 2.24% in early trading, are now up more than 2%.

This is a pretty good performance considering they had collapsed about 7% in after hours trading in New York when the news was announced overnight.

Here's how it looks:

Investing

Deutsche Bank also said it expects to book a €600 million loss on its 20% stake in Hua Xia Bank in China, as the German lender scales back its international ambitions.

The loss on Postbank comes down to an adjustment in goodwill brought on by changes in regulation which make it harder for banks to boost their balance sheet with intangible assets.

That is finance speak for banks having to be more realistic about what things are really worth, especially when it comes to valuing assets like goodwill which aren't physical and don't have a liquid market behind them.

Cryan's announcement signals a subtle shift in tone from Deutsche Bank, marking a willingness to address problems that investors had suspected were there.

Kian Abouhossein and the bank analysts at JP Morgan said: "In our opinion, DB would have announced a capital raise yesterday if necessary but is taking organic steps to improve its capital position, which we see as positive."

Meanwhile, the only major bit of economic data that we've had out on Tuesday morning was the miss in German exports which slumped 5.2% in August from July.

The FTSE 100 as a whole is down 0.26%.