Deutsche has an intricate pattern of relationships with industrial concerns, by Tony Barber

According to an old joke, one German banker asks another: "Do you work for Deutsche Bank?" Back comes the reply: "No, I haven't done my national service yet."

The joke encapsulates how Deutsche Bank's history mirrors the history of Germany itself. Set up in 1870 only months before the German empire's foundation, Deutsche represented an attempt by Prussian and later German bankers to free their country's financial transactions from the control of British and other foreign banks.

Groups such as Philipp Holzmann, Krupp, Mannesmann and Siemens all worked closely with Deutsche to turn Germany into one of the world's dominant industrial nations by 1914.

Deutsche also played a part in Kaiser Wilhelm II's plans to expand German power abroad, most notably by taking overall control of the construction of the Baghdad Railway. During the first world war, Deutsche was so heavily involved in financing the state's war effort that its business in commercial bills and stock market transactions virtually dried up.

Like other banks, Deutsche never fully stabilised itself after Germany's defeat in 1918. Revolution, strikes and hyperinflation were soon followed by the Great Depression. Even before the Nazi takeover in 1933, Deutsche's reluctance to rescue two of its biggest rivals, Danat-Bank and Dresdner Bank, from collapse led to an enormous extension of state authority over the financial system. Meanwhile, Adolf Hitler was turning public opinion against the banks by denouncing their lending rates as "interest slavery".

The impact of Nazi anti-Semitism was quickly felt when Oscar Wassermann, Deutsche's Jewish chairman, was forced to resign in May 1933. Another Jewish-born former chairman, Georg Solmssen, privately bemoaned "the lack of any feeling of solidarity on the part of those who have up to now worked in business shoulder to shoulder with Jewish colleagues".

After the annexation of Austria and the Sudetenland in 1938-39, Deutsche, like the rest of German business, was absorbed into the Nazi war machine. For that role, the US occupying authorities in 1945 wanted to punish the bank by closing it down.

But Deutsche, though temporarily split into three banks based in Düsseldorf, Hamburg and Munich, was reunited as one entity in 1957 with its headquarters in Frankfurt.

Since then, Deutsche has emulated Germany by becoming increasingly international in outlook. As of 1998, 280 of Deutsche's 414 consolidated subsidiaries were foreign.

With the euro's introduction last January, the bank says it regards Europe rather than Germany alone as its home market. Its ambitions to be a global institution moved forward in 1999 when it completed the $9.1bn purchase of Bankers Trust of the US.

This made Deutsche one of the world's three largest banks in terms of assets, with total assets of more than $800m. It also underlined the view of Deutsche's current chairman, Rolf Breuer, that the bank ought to be part of the global banking elite.