Oct. 26 (Bloomberg) -- Deutsche Bank AG, Germany's biggest bank, is considering whether to join an $80 billion plan backed by the U.S. Treasury to revive the commercial paper market, Chief Executive Officer Josef Ackermann said.

``We're currently studying it and we're in a constructive dialogue with the American banks as well as American authorities,'' Ackermann said in an interview last night in Frankfurt. ``Any kind of support for the market, particularly from the private side, is desirable, but details aren't yet clear enough to make a final judgment.''

Citigroup Inc., JPMorgan Chase & Co. and Bank of America Corp., the three biggest U.S. banks, agreed on Oct. 15 to start a fund that would buy assets from distressed structured investment vehicles, or SIVs. Investors are refusing to buy commercial paper, loans due in 270 days or less, from the SIVs because they are concerned about the value of the mortgage securities, asset- backed debt and finance company bonds they own.

U.S. Treasury Secretary Henry Paulson, a former chief executive officer of Goldman Sachs Group Inc., brokered talks in Washington last month after the commercial paper market shutdown forced the sale of about $75 billion of assets. The plan would help SIVs avoid dumping their $320 billion in holdings, further roiling the credit markets after rising defaults on U.S. subprime mortgages.

Credit Market Turmoil

``Basically, if we can achieve an increase in demand, create transparency and contribute to returning calm to the markets, it should be supported,'' Ackermann said, reiterating similar comments he made on Oct. 21 on behalf of the 31-member board of the Institute of International Finance in Washington.

Frankfurt-based Deutsche Bank is the second German finance company to say it is looking at the fund after Dresdner Bank AG, the banking arm of insurer Allianz SE. Wachovia Corp., based in Charlotte, North Carolina, has said it will back the fund.

Banks worldwide manage a total of 36 SIVs, according to a Moody's report in July. Many of the vehicles can't find buyers for their commercial paper. Ackermann said on Sept. 3 it has total assets of 32 billion euros ($46 billion) in Deutsche Bank- sponsored asset-backed commercial paper conduits.

Ackermann also said he is convinced the financial markets will stabilize and Deutsche Bank is sticking to its 2008 earnings targets. The bank, which reports third-quarter earnings on Oct. 31, aims for pretax profit of 8.4 billion euros next year, excluding one-time gains and costs.

Deutsche Bank shares rose 54 cents, or 0.6 percent, to 87.42 euros in Frankfurt. The stock has fallen 14 percent this year, valuing the company at 46.2 billion euros.

`Everybody's Interest'

The seizure in the credit markets cost the world's biggest securities firms and banks more than $30 billion for bad loans and trading losses in the third quarter. Deutsche Bank had as much as 2.2 billion euros in writedowns and U.S. rival Merrill Lynch & Co. two days ago posted the biggest quarterly loss in its 93-year history after writing down $8.4 billion of assets, almost double the firm's original forecast.

``It's in everybody's interest that something be done to try to improve confidence,'' said Alan Webborn, an analyst at Societe Generale SA in London. ``But I think there's a fairly high chance this thing won't work. It doesn't resolve the pricing issue as to whether assets in SIVs and banks' books are priced right.''

The so-called SuperSiv, known as the master liquidity enhancement conduit, or M-LEC, will finance the purchase of the assets by selling medium-term notes and commercial paper to investors. The banks involved in the fund would provide credit lines to the entity, backing that SIVs don't have.

Concern Over Transparency

Webborn questioned whether Paulson's plan will address the lack of transparency that has roiled global fixed-income markets since July 31, when two hedge funds managed by Bear Stearns Cos. went bankrupt following losses on securities tied to subprime mortgages.

Investors aren't willing to rely on estimates by Wall Street traders to value these bonds and there's no central trading system or exchange. Fitch Ratings says the value of SIVs, which own more than $320 billion of bonds, fell to 73 percent as of Sept. 28 from 100 percent in July.

SIVs are starting to go under because they can't obtain funding once short-term loans come due. London-based Cheyne Capital Management Ltd.'s Cheyne Finance Plc and IKB Deutsche Industriebank AG's Dublin-based Rhinebridge Plc, a fund set up in June, defaulted on a combined $7 billion of debt after failing to obtain back-up financing.

Gordian Knot

Deutsche Bank owns a 32 percent stake in Gordian Knot Ltd, the London-based asset manager company that runs Sigma Finance Corp., the world's largest SIV. The vehicle had assets of $57 billion as of Oct. 5, according to Fitch Ratings. Gordian Knot was set up in 1993 by Nicholas Sossidis and Stephen Partridge- Hicks, who created the first SIVs at Citigroup.

Even after the Federal Reserve reduced its target interest rate for overnight loans between banks by 50 basis points to 4.75 percent on Sept. 18, investors are skittish about providing loans to borrowers pledging hard-to-value assets as security.

Ackermann said in a speech yesterday that he remains ``fundamentally upbeat'' for the banking industry next year and beyond after what he called a ``healthy market correction.''

To contact the reporter responsible for this story: Aaron Kirchfeld in Frankfurt at akirchfeld@bloomberg.net; Andreas Scholz in Frankfurt at agscholz@bloomberg.net.

Last Updated: October 26, 2007 11:58 EDT