Sept. 4 (Bloomberg) -- Deutsche Bank AG Chief Executive Officer Josef Ackermann said financial markets are stabilizing after central banks pumped more than $200 billion into the world's money markets.

``I am optimistic about the environment globally for financial institutions,'' Ackermann said today in a statement, a month after the bank described markets as ``very challenging.'' Deutsche Bank rose 2.9 percent to 94.19 euros in Frankfurt trading, while UBS AG, Europe's biggest bank, gained 1.7 percent and Credit Suisse Group advanced 1.8 percent.

``Every positive statement from a member of the financial sector helps to relieve investors,'' said Peter Braendle, who helps manage about 63 billion Swiss francs ($52 billion) in assets at Swisscanto Asset Management in Zurich.

Ackermann said ``turbulent market conditions'' in August crimped the value of holdings in the sales and trading division, which accounts for about half of revenue. UBS analysts cut their 2008 earnings estimates for European banks including Deutsche Bank by 5 percent today, citing the rout in the markets prompted by rising defaults by borrowers with weak credit or high debt.

``Market corrections, triggered in part by the drying-up of liquidity, have been significant and impacted mark-to-market valuations in our trading books and leveraged loan book,'' Ackermann said. Even so, he said he was ``pleased'' with the performance of the consumer-banking and money-management units.

Profit Target

The company aims to raise pretax profit excluding one-time gains and costs to 8.4 billion euros ($11.4 billion) in 2008 by expanding what Ackermann has called ``stable'' businesses to help compensate for swings in investment-banking revenue. The bank had pretax profit of 5.86 billion euros in the first half, of which about 18 percent came from private banking and asset management.

Deutsche Bank is disbanding a London-based team of traders that lost more than 100 million euros in the last month on wrong- way bets on credit markets using the firm's money, a person with knowledge of the situation said on Aug. 30. Some members of the 14-person team are leaving the bank and others are being assigned to new posts, the person said.

Deutsche Bank has continued to be able to access financing, the CEO said. Asset-backed commercial-paper affiliates to which Deutsche Bank provides funding hold assets of 32 billion euros and have no U.S. subprime mortgage investments, he said. Deutsche Bank consolidates the affiliates on its balance sheet.

IKB Bailout

Companies that depend on commercial paper, debt due in 270 days or less, are facing funding shortages as investors refuse to buy debt secured by assets including subprime mortgages. IKB Deutsche Industriebank AG and Landesbank Sachsen Girozentrale had to receive emergency funding last month to keep them afloat after vehicles that they supported couldn't refinance in the markets.

The European Central Bank added more than 200 billion euros of extra cash to stabilize the money market between Aug. 9 and Aug. 14. The U.S. Federal Reserve cut its rate on direct loans to banks on Aug. 17 and the Bank of England said Aug. 21 it loaned funds at its emergency rate for the first time in a month.

``We've passed some of the panic phase and things are calming a little bit,'' said Bill Tedford, a fixed-income strategist with Stephens Capital Management in Little Rock, Arkansas. Even so, ``money is much harder to come by than it was, not because there's not money there but because people aren't willing to lend it.''

Ackermann, 59, said at a conference in Frankfurt today that Deutsche Bank pointed out problems at IKB to regulators. IKB had to get a 3.5 billion-euro bailout from KfW Group and German banking associations to cover losses tied to subprime investments, 10 days after saying they wouldn't affect earnings.

`Well Controlled'

Keeping quiet would have done more damage to the German banking market, Ackermann said. Companies should learn from the current crisis not to invest in assets and markets that they don't understand, he said, adding that Deutsche Bank's credit risk is ``well-controlled.''

Today's banking conference was originally expected to include Peter Wuffli and Thomas Fischer among its speakers. Wuffli was ousted as CEO of UBS in July after U.S. subprime mortgage losses prompted the collapse of its Dillon Read Capital Management LLP hedge fund. Fischer was ousted as CEO at WestLB AG, Germany's third-biggest state-owned bank, amid probes by prosecutors and regulators into the company's stock trading.

``The fact that Ackermann pointed out his risk management was working is very good,'' said Michael Cloth, an equity analyst at Dresdner Bank AG. ``Still, about two-thirds of Deutsche Bank's earnings come from investment banking. We remain careful and prefer stocks with a more balanced earnings mix.''

Profitability Target

Deutsche Bank has also made promises to buyout companies of loans valued at 29 billion euros and so-called equity bridges of 750 million euros, Ackermann said. The environment for structured products and leveraged lending ``remains challenging,'' he said. The company warned last month that revenue from leveraged finance would drop because of increasing risk aversion.

Deutsche Bank is among the lenders being forced to hold onto 9 billion pounds ($18.1 billion) of loans for Kohlberg Kravis Roberts & Co.'s purchase of U.K.-based pharmacy chain Alliance Boots Plc, as investors balk at riskier assets.

Ackermann declined to comment at the conference on whether the bank's pretax return on equity target of 25 percent is under threat. Developments during the rest of this year will show whether the company will meet its targets, he said. Pretax return on equity in the first half was 38 percent.

Deutsche Bank shares have fallen 7.6 percent this year, valuing the company at 49.4 billion euros. Ackermann, who has led the bank since May 2002, presided over a 24 percent rise in the share price.

The Swiss national has sold more than $17 billion in assets, shed 11 percent of the workforce and reorganized the securities division. At the same time, he twice stood trial for approving bonuses to former Mannesmann AG directors in his role as a supervisory board member of the telecommunications company.

To contact the reporter on this story: Elena Logutenkova in Frankfurt at elogutenkova@bloomberg.net

Last Updated: September 4, 2007 13:54 EDT