Deutsche Bank plans share sale and part disposal of asset unit

Mar 06, 2017, 00:23
Deutsche Bank plans share sale and part disposal of asset unit

Deutsche Bank AG said Sunday it will seek to raise EUR8 billion ($8.5 billion) through a share sale, a move to shore up the German lender's capital less than two years into a major restructuring under Chief Executive John Cryan. Deutsche Bank has posted more than €8 billion of net losses in the past two years as Mr Cryan, who took over in 2015, settled misconduct investigations and scaled back capital-intensive debt-trading businesses.

The bank said it would keep its Postbank consumer division and still aimed to reduce total costs to €22 billion by 2018, the Frankfurt-based company said in a statement on Sunday. The plan is part of a bid to stabilize that business after it has suffered a long spate of asset declines. In December, Deutsche Bank said it would pay $7.2 billion to the US Department of Justice, related to its issuance and underwriting of residential mortgage-backed securities (RMBS) and other activities between 2005 and 2007.

Earlier Friday, Bloomberg reported that Deutsche Bank was planning to raise more than $10 billion through a capital raise and partial sale of its asset management business.

Shares (Berlin: DI6.BE - news) in the bank plunged at several points throughout the year, including when news of the DoJ's demand became public in September and when several hedge funds later withdrew investments.

The bank said the share sale would boost its common equity Tier 1 ratio to 14.1 percent and set a new target of "comfortably above" 13 percent.

With (Other OTC: WWTH - news) conscientious savers and high-performing small and midsize companies, Europe's largest economy offers a reliable income if not the sky-high profits of financial market adventures.

Deutsche Bank fell 1.3 percent to close at 19.14 euros in Frankfurt on Friday, and shares traded in the USA continued to drop.

The bank will partially float its asset management business and retain Postbank - the retail banking business it had been expected to sell.

Attractive buyers proved scarce in a crowded market where low interest rates have hurt retail-banking profits. The lender will propose a dividend in May of 0.19 euros per share and is recombining its investment banking and trading units.

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