Outlook: Two also-rans don't make a winner

IS IT Teutonic determination which is driving Deutsche Bank, or just empire-building madness? Morgan Grenfell was one of the top merchant banks in the City when Deutsche took it over in the late 1980s. Nobody would recognise it as that today, despite the hundreds of millions of pounds poured into it and the capital put behind it.

It hasn't all been Deutsche Bank's fault, but a once great City house has been reduced to an also-ran. Even its name has been largely erased from the landscape. Rather than seeing this debacle for what it is - a cockup of considerable proportions - Deutsche blames it on Morgan Grenfell being too small to compete, particularly in the all-important US investment banking market. To correct the position, it is now buying Bankers Trust, which at least has the merit of already being an also-ran, both in the UK and the US.

Will two also-rans make a top dog? It hasn't so far worked at Warburg Dillon Read, which is still in a state of profound post-surgical shock after last year's merger with UBS. The pain of this latest City merger is likely to be even worse. Obviously, for employees there is nothing other than a P45 in these huge consolidating mergers, while it goes without saying that clients and customers rarely gain a dime. But it is not clear that shareholders get anything out of them either, long term.

Deutsche reckons that tradeable securities are now so much a part of global banking that it cannot be a serious bank without an investment banking presence. Just try that one on Sir Brian Pitman, chairman of Lloyds TSB.