Deutsche Bank bet your concern about the capital's largest banks give way to a race for higher returns.

Deutsche Bank AG CEO Josef Ackermann, you can bet your concern about the capital's largest banks give way to a race for higher returns.

Deutsche Bank ratio of core capital, a cushion against losses, may fall to the lowest level among the eight competitors with the new rules of Basel III in 2012, even after it raised € 10,200,000,000 (13.4 billion dollars) in a share sale in October, according to Christopher Wheeler, an analyst at Mediobanca SpA

Ackermann, who avoided the help of the German government during the credit crisis, warned at a conference in Frankfurt in September against a "dangerous race to the top" among banks seeking to raise reserves above the requirements of Basel , year III before the rules occur, Deutsche Bank, Germany's biggest bank, may be able to have less capital than their peers, and borrow more money to increase yields, because their customers are convinced that the government never would not, analysts and investors said.

"Deutsche is to have a vision a little more about the commercial capital, which will probably only be," said Wheeler, based in London, which has a "neutral" rating on the stock. Deutsche is one of the "too big to fail banks, why on earth if you are a customer you are concerned about counterparty risk? "

Ackermann, 62, said in October that the Deutsche Bank expects to meet the requirements of Basel III, in 2013, six years ahead of schedule. Ronald Weichert, a spokesman for Frankfurt-based Deutsche Bank, declined to comment further.

"Close as possible"

Wheeler Central estimates of Deutsche Bank's Tier 1 capital ratio would be reduced to 7 percent in 2012, when calculated to reflect all changes to Basel III. In their calculations, I walk in Paris BNP Paribas SA and Societe Generale SA, HSBC Holdings Plc and Barclays Plc, London, Zurich-based UBS AG and Credit Suisse Group AG and Goldman Sachs Group Inc. and Morgan Stanley New York.

"Deutsche Bank can find the best way to increase shareholder value is to run as close to the level of capital they can get away with operational and regulatory perspective," said Dirk Hoffmann-Becking, an analyst at Sanford C. . Bernstein Ltd. with a "market perform" rating on the stock.

Some investors believe that the capital is of paramount importance, especially after the concerns of sovereign debt hit European markets in 2010. Operating with a thinner capital cushion than their peers could be counterproductive, especially in case of default of the member governments of the euro, said Daniel Hupfer, who helps manage about $ 42 billion, including shares of Deutsche Bank in MM Warburg.

"Haircuts' Euro

"Deutsche Bank's ambition should be to boost its capital reserves," said Hupfer, based in Hamburg. "We do not know what will happen to the countries of the euro and could have haircuts" sovereign debt. "That definitely hit the banks and then capital will be a problem again."

Deutsche Bank and Deutsche Postbank AG, the consumer lender took control this month, with a net € 19400000000 sovereign debt of Belgium, Greece, Ireland, Italy, Portugal and Spain, or 69 percent of the base banks' Tier 1 capital, according to calculations by Hoffmann-Becking.

Hupfer said investors may be paying a lower value to Deutsche Bank in part because of its level of capital. Participation in trade 0.63 times book value, the third lowest among the 20 closest competitors worldwide bank by market value.

Deutsche Bank has dropped 12 percent in Frankfurt trading this year, compared with a decline of 6.5 percent in the 53-company Europe Banks and Financial Services Index.

Capital buffer

Leaders of the Group of 20 nations, last month adopted the rules, known as Basel III, which will more than triple the highest quality capital that banks must maintain. The Committee on Banking Supervision developed the new regulations after a credit crisis forced governments from Washington to Berlin to rescue financial institutions and led to the worst global recession since the Great Depression.

Rulemakers left to national governments to decide whether to require banks to maintain additional reserves. German regulators have given no indication that Deutsche Bank will ask the country or the other big lenders to do so. Basel III rules are scheduled for full implementation in 2019.

"Legislators have given German BaFin several new tools since the financial crisis involving a bank-by-bank, as the need for higher capital ratios," said Sven Gebauer, a spokesman for the country's financial regulator.

Switzerland stance

Germany's position contrasts with Switzerland, where regulators are proposing to raise the basic minimum capital requirement Basel III ratio of at least 10 percent from 7 percent for UBS and Credit Suisse, the country's largest banks. Britain may follow with similar requirements, Morgan Stanley analysts said in a report of 20 October and also is examining whether larger banks should be divided and how to limit the premiums.

JPMorgan Chase & Co. analyst Kian Abouhossein ratio estimates Deutsche Bank's core capital could fall to 7 percent in 2012 under stricter regulations, the second lowest in a group of 12 banks.

Morgan Stanley Huw van Steenis said in a note dated 11 October that the German lender will have "less room for error as compared to their peers" and "being obliged to repay the capital."

Deutsche Bank believes that its core capital ratio may reach 8.1 percent by late 2013, helped by retained earnings.

Leverage Cap

Investment bank Deutsche Bank uses less capital in the first nine months, while boosting profitability, reports show. Average capital assets assigned to the division fell to 16.7 million euros in the period of 18.6 million euros a year earlier. Pre-tax return of the unit where the capital rose to 36 percent this year from 22 percent in total assets grew 16 percent.

Deutsche Bank also more competition for borrowed funds, or leverage, to increase revenue. Their assets amounted to 51 times shareholders' equity on September 30, over 48 times in late 2006, based on international accounting standards. Only Brussels-based Dexia SA has more influence among the 15 largest listed banks in Europe. use of large investment banks for loans, which may exaggerate the risks, they blamed the Federal Reserve, Ben S. Bernanke, for his contribution to the financial crisis.

The Basel Committee aims to use the cover 33 times in the course of the review of financial regulation. It will assess the relationship between 2011 and 2017 and decide whether adjustments are required, with the aim of which is binding at the beginning of 2018, the commission said in a report last week.

"Intelligent Strategy '

Deutsche Bank prefers to use Generally Accepted Accounting Principles in the U.S., net derivative positions, to measure their influence. By that standard, its assets in late September on a par with its target of 25 times equity, up from 23 times the previous year and below 38 times in mid-2008, company reports show. By comparison, Goldman Sachs, capital assets were 12 times at the end of September.

"It's a smart strategy," said Lutz Roehmeyer, who helps manage about 12 million at Landesbank Berlin Investment, including shares of Deutsche Bank. "If you have less capital and higher leverage, then you have a higher return on capital."

The bank may benefit most from what some colleagues of a potential pickup in business investment banks in the first quarter, analysts said. "They are better off with a margin if the markets turn," said Wheeler in Mediobanca.

ROE vs. Capital

Ackermann has sought to counter criticism that the business of Deutsche Bank is too risky to making acquisitions to reduce dependence on investment banking, which represents about two-thirds of revenue. Led to the purchase of Postbank, the wealth manager Sal Oppenheim and some of the commercial banking operations of ABN Amro in the Netherlands in the last 15 months.

The native of Switzerland, said in September that the stock sale could raise sufficient funds for Postbank, regulatory changes and investments, so that another capital increase necessary. Ackermann said that the financial industry's profitability will be reduced through excessive regulation and lack of global coordination of standards.

"Deutsche Bank expects the market will focus more on return on equity capital," said Dirk Becker of Kepler Capital Markets, whose recommendations on the action had the highest total return over the past year."They simply have no choice if they want to avoid another capital increase."