- Thomson Reuters
Deutsche Bank is looking at “conducting preparatory steps” for a potential $8.5 billion capital raise.
Here’s the statement from the bank:
“Deutsche Bank confirms that it is conducting preparatory steps for a potential capital raise of approximately EUR 8 billion and several potential strategic measures. These include retaining Postbank and integrating it with the Bank’s existing German retail and commercial business and a sale of a minority stake in Deutsche Asset Management via an initial public offering. Implementation is subject to market conditions and approval by the Management Board and the Supervisory Board. At this stage, no decision to proceed has been made.”
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.
Deutsche Bank’s capital position has long been a topic of discussion on Wall Street, and questions about capital have dominated recent earnings calls. 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.
John Cryan, CEO at Deutsche Bank, said in an earnings call in February:
“It looks as though we’ve got a decent foundation, and with a lot of the one-off costs behind us that have been driving these negative overall results for the past couple of years, we’re sitting here in early February this year in a very different mood from the one we were in a year ago, feeling a lot more confident and optimistic about the outlook for the rest of the year and actually for the delivery of our overall strategic plan.”
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. Deutsche Bank’s core capital ratio was 11.9% at the end of 2016.
“We still need to manage two items in parallel, which is the capital buildup until the end of 2018 where we need to be or want to be at least at 12.5%, and we’re committed to that and do everything that is necessary. But at the same time, we also want 2017 to be a year where from a profitability point of view we see an improvement.”