Deutsche bank bets in­vestors will choose re­turns

The Pak Banker - - Front Page -

FRANK­FURT: Deutsche Bank AG Chief Ex­ec­u­tive Of­fi­cer Josef Ack­er­mann may be bet­ting con­cern about cap­i­tal at the biggest banks will give way to a race for higher re­turns.

Deutsche Bank's core cap­i­tal ra­tio, a buf­fer against pos­si­ble losses, may fall to the low­est level among eight com­peti­tors un­der new Basel III rules in 2012, even af­ter it raised 10.2 bil­lion eu­ros ($13.4 bil­lion) in a share sale in Oc­to­ber, ac­cord­ing to Christo­pher Wheeler, an an­a­lyst at Me­diobanca.

Ack­er­mann, who shunned Ger­man govern­ment aid dur­ing the credit cri­sis, warned at a Frank­furt con­fer­ence in Septem­ber against a "dan­ger­ous race to the top" among banks seek­ing to lift re­serves above Basel III re­quire­ments years be­fore the rules kick in. Deutsche Bank, the largest Ger­man bank, may be able to hold less cap­i­tal than peers, and bor­row more to en­hance re­turns, be­cause its clients are con­vinced the govern­ment would never let it fail, an­a­lysts and in­vestors said.

"Deutsche is tak­ing a slightly more com­mer­cial view on cap­i­tal, which prob­a­bly only they can," said Lon­don­based Wheeler, who has a "neu­tral" rat­ing on the stock. "Deutsche is one of the toobig-to-fail banks, so why on earth if you're a client would you be wor­ried about the coun­ter­party risk?" Ack­er­mann, 62, said in Oc­to­ber that Deutsche Bank ex­pects to ful­fill the Basel III re­quire­ments as early as 2013, six years ahead of sched­ule. Ron­ald We­ichert, a spokesman for Frank­furt-based Deutsche Bank, de­clined to com­ment fur­ther. -PB News

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