Deutsche Bank's plan, announced in Frankfurt this week, to create a single, Europe-wide, banking network represents a dramatic change of strategy for Germany's biggest bank. But it could be the first step in a process that will have a major impact on retail banking across Europe by combining branch offices and Internet operations while allowing customers to access their accounts in any European country at no extra charge.
A few months ago, Deutsche's restless, permanently tanned chairman, Mr Rolf Breuer, appeared eager to ditch his bank's 7 million private customers in order to graze on the more profitable pastures of investment banking. But that was before the collapse of a planned merger with Dresdner, which has itself just called off merger talks with a smaller German bank, Commerzbank.
"Full mergers are not the right thing in this country," Mr Breuer declared on Thursday as he announced a 119 per cent increase in Deutsche's first half, pre-tax profits.
Most of these profits came from the sell-off of about €2 billion worth of shares in Allianz, the insurance company that itself owns a substantial stake in Deutsche Bank. Investment banking accounts for about half of Deutsche Bank's profits but Mr Breuer, who has changed strategy no less than nine times since taking charge of Deutsche six years ago, is now set to devote his bank's energies to winning millions of new, private customers across Europe.
At the heart of the new strategy is a plan to bring together Deutsche Bank's operations in Germany, Italy, Spain, France, Portugal, Belgium and Poland under the banner of Deutsche Bank 24, as its retail operation in Germany is known. The new bank, to be called Bank 24 Europa, will start with 10.5 million customers, 21,000 staff and more than 2000 branches.
Mr Breuer hopes to win three million new customers within the next four years and he said that Deutsche is already in talks with potential retail partners in France.
Deutsche Bank's new strategy could revive speculation about a possible take-over of Bank of Ireland that surfaced last year but subsided when Mr Breuer appeared to be turning his back on retail banking. The latest shift in strategy makes Irish banks an interesting option for Deutsche once again and AIB's substantial presence in Poland could prove attractive to Mr Breuer.
Deutsche Bank already has 290 branches in Spain, mainly along the Mediterranean coast where there is a substantial German expatriate community, making it the largest non-domestic presence in the country. Deutsche occupies a similar position in Italy and hopes to have 50 branches in France by the end of this year.
The decision last year to merge Deutsche's branch business and online unit, creating Deutsche Bank 24, may have been one of the shrewdest of Mr Breuer's erratic career. Despite some disquiet from branch customers who feared that their service was being downgraded, the bank has attracted 400,000 new customers since its launch.
Deutsche has been able to avoid taking the unpopular step of closing too many branches by using technology to make each individual branch more profitable. If Mr Breuer has his way, the branches will become more profitable still by becoming sales outlets for a range of financial services, possibly in co-operation with Allianz.
As part of its European strategy, Deutsche is setting up a new online broker called Maxblue, targeting clients of discount brokers who want advice as well as low-cost share dealing.
By outlining such an ambitious plan, Mr Breuer has stolen a march on his rivals and left behind the embarrassing collapse of his planned merger with Dresdner. As Dresdner and Commerzbank look increasingly like take-over targets, Deutsche has gone on the offensive by setting the pace for the consolidation of Europe's banking industry.
For Mr Breuer, the stakes could scarcely be higher and, like a cat with nine lives, the flamboyant chairman may now be taking his last chance to shape the future of Europe's biggest bank.
