Die Deutsche Bank
by
Paul A. Schons

Originally published by the Germanic-American Institute in March, 2003

Since its beginnings in the 19th century, the name of Germany’s largest private bank Die Deutsche Bank has led to confusion between itself and the German central bank, Die Deutsche Bundesbank (earlier Die Deutsche Reichsbank). With the advent of the new central bank of the European Union, the European Bank, the Bundesbank has taken on a subordinate position, whereas the private bank, Die Deutsche Bank, continues to grow and fill a powerful economic position with world wide impact. With its newest large acquisition of the American bank, Bankers Trust, Die Deutsche Bank has about 100,000 employees worldwide. Die Deutsche Bank is one of the largest and most influential banks in the world.

Die Deutsche Bank was founded in 1870 in Berlin. Prior to that the financing of German world trade had been handled primarily through London banks. But with the growth of German industry and its rapidly increasing involvement in international ventures, a need had developed for an international banking facility within Germany. A group of industrialists and domestic bankers headed by Adelbert Delbrück and Ludwig Bamberger initiated the founding of the new bank.

The bank had a small start in some rented rooms in Berlin. The first head of the bank’s management was Georg Siemens. The thirty year old had previously worked with the telegraph company of his father’s cousin, Werner Siemens. (Werner Siemens was the founder of the company which would develop into the present day electronics company, Siemens AG.) When Georg Siemens met with the other members of the start-up management team during the first days he had to admit that he knew nothing about banking. One of his first tasks was to spend time in a library learning banking terminology. The chairman of the board of directors, Adelbert Delbrück, did, however, know the banking industry well.

The bank opened for business on April 9, 1870 as a joint stock company. The charter had been personally approved by King Wilhelm I of Prussia. The new bank had 76 shareholders and a starting capital of 5 million thalers ($ 3.5 million). The new bank soon established branches in Germany’s two major ports, Bremen and Hamburg as well as setting up representation in London, New York and Paris. In addition to its international transactions, the bank also broadened its base with domestic banking.
Die Deutsche Bank benefited from the economic boom following the Franco-Prussian war and the establishment of a unified Germany after 1871. By 1876 Die Deutsche Bank held more assets than any other bank in Germany.

The defeat of Germany in World War I led, of course, to great financial challenges for the bank, but it was the hyperinflation after the war that nearly destroyed it. At the worst point the exchange value of the German Mark fell to 4.2 trillion marks to the dollar. Die Deutsche Bank developed an outlandish (but successful) policy of “growing out of the crisis” and undertook a series of wide ranging acquisitions of weaker banks and other interests. The largest acquisition of this period was the merger with Deutsche Bank’s strongest competitor the Disconto-Gesellschaft.

The bank continued to grow and prosper until the Wall Street crash of 1929. That crisis was soon followed by the ascent of Adolf Hitler and the Nazi Party. The war years led to a stronger financial position of the bank initially, but with the collapse of Germany in 1945 Die Deutsche Bank, along with all of German industry, was devastated. In the Russian Zone private banks were soon disallowed and in the Western zones the bank was broken up into smaller regional banks. For the time being, Die Deutsche Bank ceased to be. Its holdings in the West were divided between the newly created Norddeutsche Bank, Rheinisch-Westfälische Bank and the Süddeutsche Bank.

It was immediately clear in the eyes of the German bankers and industrialists that rebuilding industry and reestablishing international trade would require a centralized banking system. The Western Allies too, as soon as it became clear that a dangerous conflict was developing with the Soviet Union, began to have greater interest in the redevelopment of an economically strong western Germany. By 1952 the regional offices of the old large banks, Die Deutsche Bank, Die Dresdener Bank and Die Commerzbank were allowed to begin to develop cooperative undertakings among their regional offices. In 1955 the German parliament passed a law making large national banks possible once again. In 1957 Die Deutsche Bank reconstituted itself once again with headquarters in Frankfurt. At that time Hermann J. Abs was elected to head the management of the bank.

As the German “economic miracle” with its fantastic rates of growth through the 60s and 70s took place, Die Deutsche Bank grew also at unprecedented rates. The bank reestablished itself quickly as a “global player”. Branch offices were opened in the world’s financial and industrial centers. It was Alfred Herrhausen who was at the head of the organization during the critical period of global development. He developed the strategy and oversaw much of the redevelopment of the global bank. It was possibly for the reason of his global visions that he was targeted by leftist terrorists and was assassinated in 1989.

The current head of the bank is Josef Ackermann who took the position on May 22, 2002. The domestic operations of Die Deutsche Bank along with other European banks successfully participated in the introduction of a new currency, the euro, and the withdrawal of the German mark from circulation in 2002. This was not the first new currency the bank had dealt with. It participated in exchanging the Taler for the Mark in 1873. The Rentenmark was introduced 1923. In 1924 the Reichsmark was introduced. The Deutsche Mark became the West German currency in 1948.