Deutsche Bank yesterday announced plans for a bigger-than-expected capital increase to help fund the purchase of Bankers Trust and to fill its war chest in preparation for possible purchases in Europe.

Germany's largest bank said it would issue four billion deutschmarks (€2 billion) of equity in a rights offering and place a further DM2 billion with investors through a worldwide placement excluding subscription rights.

Chief executive, Mr Rolf Breuer said he had "pencilled in" April for the capital increase and sought to whet investors' appetite for Deutsche shares by announcing that earnings in the first two months of 1999 had been "excellent".

"Our operating profit was more than one billion deutschmarks, which was well above the high, year-earlier results," Mr Breuer told Deutsche's annual results news conference. Trading profits and commission income had performed particularly well, Mr Breuer said.

He said income from the capital rise would keep Deutsche's options open to forge alliances in Europe's consolidating banking market and left no doubt it would have mulled taking part in mergers now underway in France - had it been asked.

Deutsche's share price fell 3 per cent as the capital increase exceeded a DM4 billion-mark rise Deutsche had projected last November when it announced the Bankers Trust acquisition.

The shares were trading at €50.30 at 2 p.m., down €1.60, after falling as low as €50.15 earlier in the day.

Analysts also said Deutsche's detailed 1998 results released yesterday fell short of market expectations with operating profit stagnating at DM4.38 billion after DM4.36 billion in 1997.