The effects of the crises from emerging markets and the costs of changing over to the euro contributed to a 7 per cent drop in the pre-tax profit of Germany's third-biggest private bank, Dresdner Bank, the institution said yesterday The pre-tax profit came in at 1.33 billion euros (£1.05 billion) in 1998, the bank said.

It added that it had significantly raised risk provisions in the fourth quarter, bringing total risk provisions for the full year to over 1.02 billion euros. There were increased sovereign risk provisions for Russia but also for a number of other countries, including Brazil, which had rating downgrades during the year.

In addition, there was also an increase in provisions for individual risks in eastern German states.