Dresdner Bank expects to set aside more money for bad debts in the next two to three years, its chief executive said this morning.
Dresdner, parent of both the National Irish Bank and Northern Bank, is owned by the Allianz insurance group.
Last week Allianz's finance executive cited the likelihood of higher risk provisions when revealing that he was considering further cost cuts at the bank, which has been a drag on Allianz's profits since it was bought in 2001.
Dresdner chief executive Mr Herbert Walter told journalists there would be "a certain increase, a certain normalisation" of the amount of money it sets aside for bad loans in the next two to three years.
The bank's management refused to say what this meant for cost cutting.
Mr Walter also said that he was confident the bank would be able to reach a net return on equity of 12 per cent in 2007.
Dresdner had put aside €46 million in the first six months of this year, a fraction of the €217 million in the first half of 2004.
Allianz was once a powerhouse of financial stability. but it has been dragged down by the €24 billion takeover of Dresdner, labelled by one shareholder as the "biggest catastrophe in German corporate history".