Deutsche Bank to raise $8.6bn after pricing share sale
19 Mar 2017 - 23:26
Frankfurt: Deutsche Bank AG said it will raise €8bn ($8.6bn) from a capital increase starting this week as the lender seeks to shore up its finances and boost growth.
The Frankfurt-based company will issue 687.5m new shares at €11.65 apiece, it said in a statement yesterday, in-line with the bank’s March 5 announcement on the planned sale. The shares are priced at a discount of about 35 percent from Friday’s close and almost 41 percent since Bloomberg first reported that the bank was weighing a capital raising. Existing investors will be able to acquire one new share for each two shares they now hold.
The share sale, which will run from March 21 through April 4, will be the fourth capital infusion for Deutsche Bank since 2010. Chief Executive Officer John Cryan (pictured), who had previously said he didn’t want to tap shareholders, reversed course this month after the shares almost doubled from their September low and Deutsche Bank was unable to find a buyer for a consumer banking unit.Deutsche Bank fell 1.5 percent Friday to close at €17.86. The stock is still up 80 percent from an intraday low on September 30, amid renewed optimism for banking stocks as investors speculate economic growth and rising borrowing costs could revive earnings.
“The environment for the share sale is almost perfect, given the expectation of higher interest rates and buoyant equity markets,” Ingo Frommen, an analyst with LBBW who has a hold recommendation on the stock, said ahead of today’s announcement. Germany’s largest lender has posted more than €8bn of net losses in the past two years as Cryan settled misconduct cases and scaled back risk in the investment bank. He’s trying to sweeten the offer with the promise of renewed dividends and a return to profitability this year.
The bank said previously that the latest share sale would boost its common equity Tier 1 ratio, a key benchmark of financial strength, to 14.1 percent and vowed to keep it “comfortably above” 13 percent. The measure stood at 11.9 percent at the end of 2016.