Head of Deutsche Bank striving for global market heft

Deutsche Bank chief executive Josef Ackermann's job title alone makes him an imposing figure in German industry and politics. But when Ackermann travels to New York or London, he must grapple with the reality that Deutsche Bank remains a bantam among global heavyweights like Citigroup or HSBC.

Ranked sales and assets, Deutsche Bank sits comfortably among the world's 10 largest banks. But with a market capitalization of US$47.8 billion, it ranks 28th, behind Societe Generale of France.

That is a crucial weakness, because in a consolidating industry, market value gives banks a currency with which to finance acquisitions -- allowing ambitious ones to keep pace with hungry giants like Citigroup.

"To be a world-class player, they need a market cap of at least US$70 billion," said Stuart Graham, a banking analyst at Merrill Lynch in London who has a neutral rating on the bank's shares.

Much Ackermann's strategy has been aimed at lifting Deutsche Bank's market value. He is likely to achieve another goal, a 25 percent pretax return on equity. But Ackermann used to talk a lot about vaulting into the Top 10. These days, he is playing it down.

The shift in emphasis, while subtle, is important. Analysts say Ackermann may recognize that it would be hard to double Deutsche Bank's value without a blockbuster deal. And it is hard to see such a deal on the horizon, given the political obstacles that he faces.

Ackermann also careful not to rule anything out. The recent acquisition of Germany's second-largest bank, HVB Group, by UniCredit of Italy has strengthened his hand, he said, by forcing politicians to recognize that the independence of even their big banks cannot be taken for granted.