Josef Ackermann, Deutsche Bank’s chief executive, still faces a retrial in the long-running Mannesmann bonus case in October. But on Wednesday the Swiss-born executive addressed charges that he has neglected Deutsche’s domestic franchise in favour of investment banking, by buying Berliner Bank for €681m. The deal is an excellent strategic fit. Berliner has an upmarket retail and small business client base in the Berlin region, through which the Deutsche machine will funnel its mutual funds and other products. But has Deutsche overpaid? The bank has shown admirable financial discipline in recent years, walking away from expensive deals; in Romania, for example, it was substantially outbid for Banca Comerciala Romana, which sold for five times book value.

Still, at four times book, the price for Berliner is expensive, even given cost savings expected from jettisoning Berliner’s back office operations. (Berliner will not close branches, reflecting both the demands of its client base and, perhaps, political considerations.) There will also be benefits from more efficient capital allocation under new Basel II rules. But even if synergies fall short of expectations, the impact on earnings would be pretty insignificant, given the relatively small size of the deal.

The recovery in Deutsche Bank’s return on equity in the past four years has been impressive – it hit about 25 per cent after tax, in the first quarter – and its strategy of organic growth and add-on acquisitions remains intact. Acquiring wealthier clients such as Berliner’s is certainly desirable: as well as better margins, the private client business helps bind together the still rather disparate investment banking and retail arms of Deutsche Bank. The problem is that finding such add-ons, or exciting new ventures in emerging markets, at affordable prices is getting very tricky indeed.

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