Sept. 20 (Bloomberg) -- Deutsche Bank AG, Germany's biggest bank, will write down the value of leveraged loans and scale back hiring plans after making ``mistakes'' during the credit boom that ground to a halt in the past two months, Chief Executive Officer Josef Ackermann said.

``We have certainly also made exaggerated commitments in the whole euphoria,'' Ackermann said in an interview in Berlin with Germany's ZDF television to be broadcast later today. He said the bank probably won't proceed with plans to hire about 6 percent more people though he doesn't expect to cut jobs.

Deutsche Bank may be the hardest hit of European securities firms from the fallout of rising U.S. subprime mortgage defaults. The Frankfurt-based bank, which said Sept. 4 it has leveraged- loan commitments of 29 billion euros ($41 billion), may have to take a 625 million-euro charge in the third quarter, according to analysts at JPMorgan Chase & Co.

``We are now correcting values of all these loan commitments for the next nine months,'' Ackermann said. ``This is very conservative but right.''

Deutsche Bank shares closed 2 percent lower at 92.25 euros in Frankfurt, while the 65-member Bloomberg Europe Banks and Financial Services Index lost 1.1 percent. The shares have fallen 9 percent this year on concern that a slowdown in fixed-income markets will hurt earnings. The bank gets about half of its profit from debt markets, according to estimates by JPMorgan analysts.

Wall Street Rivals

New York-based Morgan Stanley, the world's second-biggest securities firm, missed analysts' estimates yesterday because of losses on loans for leveraged buyouts and a decline in fixed- income trading revenue. Third-quarter profit from continuing operations dropped 7 percent to $1.47 billion. Lehman Brothers Holdings Inc.'s earnings Sept. 19 included a $700 million loss after writing down mortgage holdings and loan commitments.

Ackermann said earlier this month that ``turbulent'' conditions in August reduced trading revenue, though he extolled the performance of ``stable'' businesses of consumer banking and money management.

He told investors last week that the bank is ``confident of delivering'' on its profit targets for next year and beyond as analysts are cutting their estimates. The median estimate for 2008 pretax profit of 10 analysts that updated their forecasts this month is about 4 percent below the bank's 8.4 billion-euro target, according to data compiled by Bloomberg.

Ackermann didn't talk about profit targets in the ZDF interview. He said he would take a pay cut if the bank didn't meet its goals.

Job Cuts

``If we earn half, then I should get half too, or even less,'' Ackermann said. He earned 13.2 million euros in 2006, 11 percent more than a year earlier.

The bank had been planning to expand its headcount to about 80,000 this year from 75,140 at the end of June, Ackermann said. ``We probably won't do that now,'' he said.

Wall Street rivals, including Merrill Lynch & Co. and Bear Stearns Cos. have announced plans to cut jobs, particularly in subprime mortgage operations.

Commerzbank AG, Germany's second-biggest bank, said today that second-half earnings will be weaker than in the first six months of the year ``due to market conditions,'' backtracking on a previous forecast that it would beat 2007 targets.

Financial markets are going through a ``painful'' correction, Ackermann said, adding that he's ``confident'' they will stabilize.

`Time Bomb'

Central banks have pumped cash into the world's money markets since Aug. 9 to smooth lending between commercial banks. The Federal Reserve lowered its benchmark lending rate by half a percentage point on Sept. 18 in an effort to prevent an economic slump in the U.S. as a result of the turmoil in credit markets.

``There is no bigger time bomb ticking,'' he said. A recession is unlikely, although U.S. economic growth will probably slow by between 0.5 and 1 percentage points, he said.

The decision to cut rates was ``right'' because it gives ``a psychological boost,'' Ackermann said. ``One shouldn't interpret this as an act of desperation.''

He also said that he doesn't expect a run on deposits in Germany similar to Northern Rock Plc, the U.K. mortgage lender bailed out by the Bank of England last week.

``German banks are well capitalized,'' he said. ``We finance much more through customers' deposits and we have deposit guarantee instruments that go much further than in England.''

Emergency Funding

German lenders IKB Deutsche Industriebank AG and Landesbank Sachsen Girozentrale, which had to receive emergency funding to keep afloat last month, foundered in part because they tried to boost profit beyond the level that was appropriate for their business models, Ackermann said.

Central bankers have repeatedly said they don't see any systemic risks in the German banking industry because of IKB's and SachsenLB's problems.

``The German banking system is alright, and the Austrian banking system is alright as well,'' the European Central Bank council member Klaus Liebscher said in an interview late yesterday. ``There are certain problem cases which are unnecessary and which shouldn't have happened, but I don't think that we have a systemic crisis.''

To contact the reporter on this story: Elena Logutenkova in Berlin at elogutenkova@bloomberg.net

Last Updated: September 20, 2007 12:47 EDT