Imitating Goldman, Deutsche finds it’s harder than it looks

Deutsche Bank AG is finding out just how hard it is to be more like Goldman Sachs Group Inc. A decade after Germany's largest bank set out to reinvent itself as a Wall Street-styled securities firm, only New York- based Goldman earns more money from trading stocks, bonds, currencies and derivatives. And, there's little prospect that the gap between them will narrow anytime soon because Frankfurt-based Deutsche Bank eludes the risk-taking that characterizes Goldman.

While Goldman's sales and trading revenue almost doubled to $12.9 billion in the first half on big bets in the oil and stock markets, No. 2 Deutsche Bank could only manage a 38 percent increase to $9.7 billion during the same period with a trading strategy that's deliberately risk-averse.

``Deutsche Bank has made a lot of progress, but it will be a big task for them to take on the top tier of Wall Street,'' said Dale Robertson, who helps manage $1 billion in stocks at Edinburgh Partners in the Scottish capital, including shares of Deutsche Bank. ``They still have a ways to go.''

Wall Street's traders have been the engine behind more than three years of rising profits at securities firms, including Goldman, Deutsche Bank, UBS AG, Citigroup Inc. and Morgan Stanley. They typically account for about three quarters of investment-banking revenue, with the rest coming from underwriting securities and advising on mergers.

fter all, to make the most of trading opportunities for themselves and clients, firms have increased their so-called value at risk, a measure of how much they could lose in a day if the markets turned against them. While Goldman's value at risk was 40 percent higher in the second quarter than at the end of last year, Deutsche Bank's risk was almost unchanged.

http://www.bloomberg.com/apps/news?pid=20601103&sid=aXHCIHcFACkU&refer=us