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. Last Updated: 07/27/2016

Deutsche Bank Says It Can Go It Alone




FRANKFURT, Germany -- Deutsche Bank AG sought to restore its credibility with investors Thursday by posting a steep profit rise and insisting it can survive on its own after the collapse of its tie-up with Dresdner Bank AG.


One day after Dresdner called off the merger, chief executive Rolf Breuer said the collapse of the merger would not force Deutsche to seek new merger partners.


"We are dealing from a position of strength and will continue on our path," Breuer told Deutsche's annual news conference. "We are not on the lookout for a new merger partner."


Deutsche announced a 50 percent rise in first-quarter pre-tax profit and said it expected improved earnings in the current year, albeit it not at the pace seen in the first quarter.


Breuer also pledged to continue building up its profitable investment banking operations after the unit's pre-tax profit rose to 2.225 billion euros ($2.14 billion) in 1999 from 520 million in 1998.


Dresdner on Thursday pulled the plug on the merger after the banks failed to resolve a dispute over the fate of its Dresdner Kleinwort Benson investment banking division, which Deutsche had wanted to sell.


The dramatic end of the merger followed weeks of management strife between the two banks that had alienated investors, staff and customers.


The collapse marks an embarrassment for the banks and is a setback for consolidation in Germany's overcrowded banking market. It also makes Dresdner Bank vulnerable to takeover, with Citigroup seen as one of a number of possible suitors.


Breuer, long one of Germany's most respected businessmen is expected to come under mounting pressure to step down ahead of his scheduled retirement in 2002.


As analysts and newspaper commentators slammed the merger as a huge embarrassment, Breuer put a brave face on the matter, insisting that the last four weeks had "freed up a lot of energy" in which Deutsche was able to scrutinize its business and find its strengths.


"A little bit of good has come out of all this," Breuer said. "We have a better of knowledge of what we have and what we could do better."


In the end, after Dresdner opposed the sale of Kleinwort Benson, it made more sense to abandon the merger altogether, Breuer said, adding that he did not expect Deutsche's image to suffer in the long term.


Dresdner Bank on Wednesday angrily accused Deutsche of reneging on an agreement to keep the Kleinwort Benson unit.


Breuer said Deutsche's strong first-quarter 2000 earnings meant that Deutsche was under no pressure to come up with a new strategy following the merger failure.


Breuer pointed to the bank's huge war chest, saying Deutsche would return to the pillars of its pre-merger strategy, targeting growth in electronic commerce, asset management, corporate finance and private banking.


Breuer said Deutsche had 19 billion euros in reserves. "This offers enormous possibilities to sell and reinvest in growth areas," he said.