Deutsche bank bets investors will choose returns
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