November 17, 2008 / 12:48 PM / 11 years ago

UPDATE 1-Deutsche Bank CEO- End at hand for investment banks

* CEO says sees banks dropping pure investment bank model

* Deutsche Bank CEO says sees crisis remaining challenge

* Shares down 3.2 percent

(Adds CEO comments, share price)

FRANKFURT Nov 17 (Reuters) - Deutsche Bank’s (DBKGn.DE) Chief Executive, Josef Ackermann, said he expected banks around the world to drop the model of investment banking as a standalone business as a result of the financial crisis.

“We are seeing the end of pure investment banks,” he said at the European Banking and Insurance Fair on Monday.

Banks would have to combine investment banking with other businesses such as retail banking and corporate client business in the future, he said.

The current crisis, which he said was the worst the financial industry had ever seen, would remain a challenge for several more years.

Ackermann said he expected banks to continue suffering loan defaults and resulting higher risk provisions as well as high costs to refinance, coupled with lower earnings from their capital markets business.

In the medium term, however, there would be good opportunities for the banks that weather the crisis, he said.

To avert similar crises in the future, he called on legislation to allow stricter industry regulation that should include the option of flagging acquisitions that could exceed companies’ financing abilities.

By 1231 GMT, shares of Deutsche Bank were down 3.2 percent at 23.77 euros, while the German blue-chip DAX index .GDAXI was down 2.3 percent. (Reporting by Philipp Halstrick; Writing by Maria Sheahan; Editing by Andrew Macdonald)

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