Deutsche Bank has said that it will book a non-cash tax charge of about €1.5bn in its fourth quarter following a tax overhaul in the US.

The recent decision by the US government to slash federal tax rate to 21% from 35% reduces the value of the German banking giant’s deferred tax assets.

The group expects the charge to result in a small full-year after-tax loss and lower its common equity tier 1 ratio by nearly 10 basis points.

However, its ability to make scheduled payments on additional tier-1 securities will remain unaffected by the decision, the German lender said.

The bank also expects to post positive full year income before income tax (IBIT). However, it warned of a negative IBIT for the fourth quarter owing to restructuring and litigation expenses of around €500m during the period.

“This reflects the weak revenue environment, elevated adjusted costs [1] currently anticipated to be broadly in line with the prior year period, and a loss on sale from the recently announced disposal of the Polish Private & Commercial Bank business,” the bank said.

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The bank also said that trading conditions in the final quarter of 2017 were marked by low volatility in financial markets.

“Combined fourth quarter 2017 Fixed Income (FIC) Sales & Trading, Equity Sales & Trading and Financing revenues are expected to be approximately 22% below the prior year period, excluding the impact of Debt Valuation Adjustments in both periods,” the bank noted.