Deutsche Bank Plans $8.5 Billion Capital Raising, Partial Asset Management IPO


It hopes the move will boost its position on the German home market and in Europe.

Deutsche Bank plans a significant capital hike alongside the flotation of its asset management holding and further restructuring from asset disposals, Germany's biggest lender said on Sunday.

The fundraising plans confirm many investors' expectations that Deutsche Bank would be forced to tap the market for the third time since early 2013.

The plan to offer shares in the asset management business must be approved by German financial regulator BaFin. 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.

Deutsche Bank also announced today it had made a "positive start in the first two trading months of 2017".

Marcus Schenck, CFO at the bank, later said that it would do "everything that is necessary" to hit a 12.5% Core Tier 1 ratio by 2018.

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.

Proceeds from the new shares will bring the bank's core capital ratio - a key indicator of the bank's solvency and resilience - to 14.1 percent from 11.9 percent at the end of past year.

Attractive buyers proved scarce in a crowded market where low interest rates have hurt retail-banking profits.

Merging Postbank with Deutsche's retail banking operations will create a bank with 20 million customers, offering economies of scale and synergies amounting to 900 million euros a year by 2022, Cryan said. Cryan will take direct oversight for the U.S. operations, and the firm is recombining its investment banking and trading units after splitting the two in 2015.

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 lender also plans to reduce its annual severance and restructuring costs from $25.6 billion to about $22.3 billion in 2021 when it plans to implement all measures of its restructuring plan.