Deutsche Bank board to meet Sunday to discuss capital hike

Marcus Newton
March 6, 2017

Deutsche Bank on Friday night confirmed investor expectations that it needs a capital injection, saying it was doing "preparatory work" for a share sale and considering other strategic moves.

Meanwhile, the embattled firm estimates an additional €2 billion ($2.1 billion) could be raised through the disposal of non-core assets and the partial flotation of its minority stake in Deutsche Asset Management. "The Bank intends to continue serving the needs of its clients across transaction banking, corporate finance, capital markets, asset management, wealth management and retail banking". The lender is targeting a drop in its adjusted cost base from €24.1 billion a year ago to around €21 billion by 2021.

"A strong capital base is essential if we're to succeed in charting this strategy", Mr Cryan wrote in a letter to employees.

Deutsche Bank also said it won't sell its Postbank subsidiary but merge it with its existing units "in the medium term".

Jeff Urwin, who led the investment banking division, will retire from the management board after a transition period, the bank said.

While litigation costs and writedowns on past acquisitions have weighed on Deutsche Bank's earnings, it has also fallen behind its Wall Street rivals, lagging their strong fourth quarter rebound in bond trading for instance.

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The bank believes the plans will allow it to target a fully loaded common equity tier 1 capital ratio comfortably above 13 per cent and to pay a competitive dividend from 2018 onwards.

The firm plans to cut more than €2 billion of costs from the €24.1 billion in adjusted expenses it had previous year.

"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".

In December, Deutsche Bank said it had agreed a $7.2bn (£5.9bn) payment to USA authorities to settle an investigation into mortgage-backed securities.

"These additional measures are meant to strengthen the Bank's status as a leading European bank with a global reach supported by its strong home base in Germany", Deutsche Bank said in a statement.

Other reports by MaliBehiribAe

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