The news follows Merrill's announcement yesterday that its total exposure to highly geared investments and sub-prime mortages was $27.2 billion.
Dresdner traded heavily in asset backed securities, including highly geared credit products such as collateralised debt and loan obligations, according to reports in the Times.
About $287.5 million of the losses were affected by indirect business lines, the bank told the newspaper.
Executives at Allianz, Europe's largest insurer and the owner of Dresdner were positive about the situation.
Chief financial officer of Allianz, Helmut Perlet, said: "We will continue to pursue our policy of robust risk management, as well as enhance the quality and efficiency in all lines of business."
Dresdner is the latest bank to fall foul of the turmoil in the credit crisis; other European banks including Deutsche Bank, UBS and Credit Suisse have all suffered losses.