Thus Council income reported weighted stock represents only 7

The story is stalled at Deutsche Bank. October 26, Josef Ackermann, President of the Executive Board of the first German Bank, will be once again on the banks of the tribunal to answer a charge that continues for more than three and a half years: that failed in its duties by providing, as a former member of the Supervisory Board of Mannesmann, 57 million of premiums to the former management of the conglomerate in its acquisition by the British Vodafone in 2000. Despite a release in the first instance and the support of the Supervisory Board, this new judicial order paper poses the shadow of the resignation on the Swiss banker at the point where "Deutsche" is located in a "strategic cross" in the eyes of analysts of the Société Générale.

Because, while Mannesmann case bogged down, the former continental leader of the European Bank of the 1990s continues its slow and deep slide in the rankings in terms of market capitalization. Once completed, the merger of the Italian Banca Intesa and Sanpaolo IMI relegating the eighth of the institutions of the euro area, behind the first three French and only the twelfth place in Europe.

In a banking world where consolidation movement has quickened over the past two years, Josef Ackermann looked pass trains in Germany: UniCredit-HVB and Commerzbank Eurohypo. He was able to transform the Bank in depth as had his predecessor, Rolf Breuer, who had driven him first in the world in terms of assets in 1998 with the acquisition of the US Merchant Bank Bankers Trust for $ 10.1 billion. Deutsche Bank balance sheet total, which exceeded 20 Citigroup at the time, it is now 20 lower. However, the absence of new great transformative merger is not explain to her only loss of speed of Deutsche Bank, which is primarily to a lower relative valuation by the market. 9.2 Times the net profit expected for this year, according to ABN AMRO, it is the low European investment banks trio and has a discount of about 20 from the whole of the Dow Jones Euro Stoxx banks.

Although spectacular, recovery of profitability net of equity (RoE), increased 1.1 in 2002 to 12.5 last year, indeed not completely did the German establishment to bridge the gap with its big Swiss rivals. Although following it the trend investment banks the RoE of Deutsche Bank will likely achieve a peak to 16.2 per cent this year, it will remain nearly 10 points lower than that of Credit Switzerland (26.1) and less than 8 points with UBS (24.5) by Keefe, Bruyette & Woods.

A greedy group capital

Despite clear cuts in its workforce reduced by a third in six years, including divestments of subsidiaries , the group is unable to correct the defects of its economic model. From his Swiss colleagues, "the absence of a"cow milk"as the activity of private bank makes Deutsche Bank more consumer of capital", is Matthew Clark, analyst at Keefe, Bruyette & Woods (KBW). When Credit Switzerland is 36 of its profit before taxes, minority interest and exceptional items, of the private bank and the management of assets in the first half of 2006, Deutsche Bank was there realizes that 11 of its current profit. Without referring to a significantly lower rate of collection of assets. Worse, wealth and asset management continues, by far, drag the heavier costs in the sector, representing 80 of revenues in 2005, against including ratios between 57 and 66 for UBS in these trades.

No wonder therefore that because of a two times less RoE that UBS and Credit Switzerland, analysts value the branch between 9 and 11 times its benefits, against 13-16 times for the Swiss. By adding the investment portfolio, which still consumed 12 equity adjusted in 2005 for a 1 pre-tax RoE group allocates one third of its capital to its less profitable activities.

A potential underestimated

Strengths of the group, the Investment Bank and European leadership in rate trades ("fixed income") are not enough to catch up with this discrepancy. Well that having posted the fourth fastest-growing annual revenues (12.1) sector world between 2001 and 2005, according to the Boston Consulting Group (BCG), branch (81 of profit current before taxes for the group in the first half of 2006) is less valued by the offices of about 1 point multiple UBS or BNP Paribas.

"Funding of companies trades are more consumers of own funds as Investment Bank and still weigh on the RoE, even if Deutsche Bank reduced them to the course of the past years, fact observe Jean Sassus, analyst at broker Raymond James Euro Equities (RJEE). The Deutsche model immobilized also more comparable income assets. Thus, Council income reported weighted stock represents only 7.4 at Deutsche Bank and 12.8 in UBS on the basis of the figures in the second quarter of 2006. "Development in derivatives (including actions, where it is number three alongside Goldman Sachs) and the establishment of the group in Asia however give a potential often put forward by analysts, but is"underestimated by the market", provides Morgan Stanley.

Profitable retail banking

In this context, what could pass for a sudden policy reversal resembles almost a decision of good sense. Turning his back on the only development of the Investment Bank, which Josef Ackermann had initially focused its efforts, the interest recovered for retail banking presents focus on the business which produced the highest internal RoE last year (59 before taxes and exceptional items). He translated by acquisitions, blow on blow, Berliner Bank and Norisbank Germans this summer for a total of 1.1 billion euros, the boss of the Group excluding include Commerzbank or Deutsche Post in his list of potential targets.

"Deutsche Bank hopes thus to take full advantage of the improvement of the profitability of the banking sector in Germany, says Matthew Clark at KBW, but its margin of manoeuvre is in any event limited by the size of the target, which is reduced German."

This new curve enough to boost stock market After completing year last a slope in markets have the returned it une ascendante tracée par la reprise backward by the resumption of des plus l' dernier more plus l' dernier l' l' dernier dernier His arrival, in 2002, at the head of Deutsche Bank, it was Josef Ackermann the objective to bring the course to 100 euros, near the peak of 2001 (104,95 EUR) level and that the good market conditions him just early May (at 99,32 euros). If the pattern of "Deutsche" is today more than one cable of this ambition, it is however not clear that the market, or even the judges, to leave time to go much further.