Shares in Deutsche Bank soared yesterday after it took the wraps off plans to invest €1bn (£618m) a year to build up its online business.

The bank is linking up with Europe's biggest software group SAP and AOL Europe in two separate initiatives as it attempts to establish a leading position in the internet-based financial services market.

"Our aim is to make optimum use of any new opportunities that arise. The first mover in this business has a real advantage and we want to exploit it," said Deutsche Bank's chief executive, Rolf Breuer.

The net effect saw Deutsche Bank's shares climb almost 6% to €85.22 yesterday, making it one of the few bright spots in an otherwise lacklustre Frankfurt market.

"It is important that Deutsche Bank is taking a comprehensive approach to business in the internet age," said a German analyst.

Deutsche, which has spent heavily on investment banking, including the $10bn (£6.2bn) acquisition of Bankers Trust, has increasingly sought to bolster the retail side of its business.

Last year, for instance, it held talks with Dresdner Bank about a merger of their retail operations, although the talks came to nothing.

Deutsche has reached agree ment with SAP, best known for its business to business products, which will allow the bank to offer financial and trading services to investors through web-based virtual exchanges.

The deal with AOL Europe, a joint venture between AOL and German media group Bertelsmann which has been the subject of speculation about a split, will provide online banking and brokerage services.

Later this year Deutsche plans to launch net start-up investment funds in the US and Asia. An internet portal named Moneyshelf.com offering services from investment to insurance is also planned.

Mr Breuer said yesterday that the bank would fund its investment programme from the capital gains realised by selling parts of its large portfolio of industrial investments.

The German government has recently announced plans for the withdrawal of capital gains tax on the profits realised by companies from the sale of shares in other domestic firms, making it more attractive to businesses to liquidate their holdings - which are often of long standing.

Competition in German retail banking is increasing rapidly. Recently both HypoVereinsbank and Commerzbank announced online initiatives - the former through a €100m investment programme and the latter through a portal deal with T-Online, the internet subsidiary of Deutsche Telekom.