DEUTSCHE BANK’S proposal on September 12th to raise €9.8 billion ($12.7 billion) in capital might have been expected to spook stockmarkets. This, after all, was a bank that had got through the financial crisis without calling on the state or its shareholders. But the markets shrugged it off and instead cheered the announcement of new global capital rules by the Basel Committee on Banking Supervision. Both reactions may come to seem foolish.  The proposed share issue caused little fear because most of the money will be used to finance Deutsche Bank’s acquisition of the remaining 70% of Deutsche Postbank, which has Germany’s biggest retail branch network. Deutsche Bank reckons the tie-up will produce revenues and cost savings of almost €1 billion. The transaction is an important step in reducing overlap in Germany’s chronically unprofitable retail-banking industry. It will also make Deutsche Bank less reliant on investment banking. Yet Postbank is already causing indigestion: absorbing it will trim almost €8   billion in scarce capital from Deutsche Bank’s balance-sheet.

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