When the idea of founding Deutsche Bank became reality in 1870, banking was at the beginning of the new age.
Industrialization meant that industry’s financing needs were growing and the highly traditional banking sector was going
to have to move with the times.
Deutsche Bank in the German Empire
In Berlin, a number of private bankers were open to new ideas. Their leading lights were Adelbert Delbrück and Ludwig Bamberger, both regarded as the “true founders” of Deutsche Bank.
The bank’s statute was adopted on January 22, 1870, and a little under two months later, on March 10, 1870, the Prussian government granted it a banking license. This was the last license issued to a joint-stock bank in Prussia. The license requirement was abolished that same year.
The statute placed great emphasis on foreign business: “The object of
the company is to transact banking business of all kinds, in particular, to promote and facilitate trade relations between Germany, other European countries and overseas markets.” The direct aim was to challenge the monopoly of British banks, which continued to dominate the financing of German foreign trade.
From the initial start, international business was built up steadily. Between 1871 and 1873 Deutsche Bank opened five branches: in Bremen, Yokohama, Shanghai, Hamburg and London.
In the very year of its foundation, Deutsche Bank began to accept deposits in cash. Nowadays that sounds self-evident, but for the German banking world, it was little short of revolutionary. The bank needed a solid base and found it in the deposit-taking business.
Georg von Siemens, one of the two original members of the Management Board and a leading light in the history of Deutsche Bank, realised this from the start.
The bank remained there for just over a year and then moved, together with around fifty staff, to premises very near the Berlin Stock Exchange.
Deutsche Bank’s early decades were a period of rapid expansion; the bank had an eye for good business prospects and a sound feel for risk. Issuing business began to grow in importance in the 1880s, and in the 1890s it really took off. And it meant that the capital market could be tapped for investments in new industrial and infrastructure enterprises. The bank played a major part in the development of Germany’s electrical engineering industry, but it also gained a strong foothold in chemicals and steel.
When in spring 1914 the “Frankfurter Zeitung” told its readers that Deutsche Bank was “the biggest bank in the world”, the claim marked not only the climax but the end of an era. The First World War brought the first phase of the globalization of the world economy to an end and forced Deutsche Bank to concentrate on its activities in Germany
for a long period.
Deutsche Bank in the Weimar Republic
The immediate post-war period was a time of liquidations and acquisitions. The bank had lost most of its foreign investments and branches. In Germany, by contrast, the branch network was expanded considerably, mainly via mergers with partner regional banks. There was a new business, some of which was to have an impact for a long time to come.
In terms of its political impact, that crisis was the most disastrous economic event of the century. The shortage of liquidity that paralyzed the banks was fuelled by a combination of short-term foreign debt and borrowers no longer able to pay their debts, while the inflexibility of the state exacerbated the situation.
For many years, it would not be possible to return to circumstances that might in some ways have been considered reminiscent of the ‘golden age’ before the First World War.
Deutsche Bank in the NSDAP Regime
Although its leading representatives scarcely agreed with the ideology of National Socialism, they complied with the racist goals of the regime from the outset, putting up no resistance; the feeling of impotence and feebleness instilled in them by the aftermath of the 1931 banking crisis and the anti-bank ideology of leading Nazis was simply too great. Adaptation and a willingness to compromise were in their view the order
of the day.
When in 1938 the National-Socialist government began systematically to
monitor and freeze Jewish assets, Deutsche Bank’s Jewish customers were affected as much as those of all other banks. By the time the war ended, almost all account assets and deposits held by Jewish customers had been transferred to the German Reich.
No one offered any direct resistance to the new Nazi legislation; in fact, to do so would have been extremely dangerous, as witnessed by the example of two Deutsche Bank directors who were executed in 1943 simply for voicing “defeatist” remarks.
Even before the Second World War, Deutsche Bank used the aggressive expansion of the German Reich into Austria and Czechoslovakia in order to open new branches in those areas and acquire holdings in banks already operating there. Once the War had commenced, the same kind of business expansion was pursued in the occupied countries of western and south-eastern Europe.
Research by the independent Historical Commission also found that the Katowice branch and the sub-branches under it had granted loans to construction firms working at Auschwitz, where they were engaged in building the IG-Farben factory and the concentration camp. Deutsche Bank acknowledges its ethical and moral responsibility. That is why it was not only involved in the foundation set up jointly by German business and the federal government, “Remembrance, Responsibility and the Future”; it is also making every effort to have its own past fully and critically reappraised.
Deutsche Bank in Separated Germany
The post-war period proved to be the toughest in its history. The occupying forces either nationalized all banks — as happened in the Soviet zone, for example — or allowed them to remain in operation at a regional level. In 1947–48, Deutsche Bank was broken up into ten banks, thereby briefly reviving at least the names of some banks that had disappeared in mergers many years before. Banking under the name “Deutsche Bank” was henceforth forbidden.
In 1952 an interim solution was reached, with Rheinisch-Westfälische Bank being set up in Düsseldorf, Süddeutsche Bank in Frankfurt and Munich, and Norddeutsche Bank in Hamburg. In 1957 the three merged to form Deutsche Bank once again.
Deutsche Bank Nowadays
The post-war period was a time of crucial decisions concerning banking policy. Product policy played a relatively minor role. This changed at the end of the 1950s when the bank ventured into general retail banking. Within a couple of years, the number of private clients increased immensely, corresponding with strong growth in the domestic branch network.
International business grew far more important in the 1970s. Deutsche Bank began to take shape as a global group. New branches abroad supported this development. The evolution of financial markets, technological progress and the acquisition of major banks in Italy, Spain, the UK, and the United States have all meant that Deutsche Bank has changed more in the last decades than in the preceding century.
In the following years, international investment banking accounted for an
ever-increasing share of Deutsche Bank’s business. Globalization brought the capital markets even closer together. The liberalization of economic areas and innovative technologies opened up new growth opportunities. Since then Asia, in particular, has seen new markets
develop at stunning speed.
