Deutsche Bank is asking investors for an $8.5 billion do-over
- Author: Anthony Vega Mar 07, 2017,
Mar 07, 2017, 0:15
Return on Tangible Equity Target: Deutsche Bank retained its 10% target for post-tax return on tangible equity, but meeting this target will now be more hard given the increased equity base after the issuance.
German banking powerhouse Deutsche Bank wants to beef up its capital reserves by selling off millions of new shares, as well as overhauling its business structure, in the wake of massive losses and global sanctions. Deutsche Bank investors have said in the past that they would prefer a partial sale of the asset management unit over a rights issue.
Deutsche Bank confirmed that its chief financial officer, Marcus Schenck, will move over to run the newly recombined investment bank and trading businesses, along with global markets chief Garth Ritchie.
"A strong capital base is essential if we're to succeed in charting this strategy", Mr Cryan wrote in a letter to employees.
Deutsche will promote retail banking head Christian Sewing and finance head Markus Schenck to oversee the revamp as co-deputy CEOs alongside Cryan.
The Head of the Corporate & Investment Bank and Deutsche Bank's USA business, Jeffrey Irwin will retire from the from's Management Board. It has spent the last 18 months trimming its portfolio, throwing out bad clients and trying to get its technology into shape.
However the $7.2 billion settlement it reached with the U.S. Department of Justice in December for selling toxic mortgage backed securities and its struggling markets business meant Deutsche Bank needed more radical action to bolster its balance sheet.
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Bank chief, Cryan, has attempted to eliminate costs and retool Deutsche Bank's business since he took over at Germany's most prominent lender in the middle of 2015.
Payout Ratio Target: Deutsche Bank's relatively weak capital situation has forced the bank to keep dividends low since the downturn, and this is not expected to improve in 2017.
"The question is ... whether the bank will need more yet again in a few years".
German banking giant Deutsche Bank AG has just announced a €8 billion share sale and investors aren't taking the latest capital-raising initiative in stride, pushing the stock sharply lower in European trade.
Deutsche Bank AG (NYSE:DB) considered as an active stocks in last lead, shares Drops -4.26% to $19.35 as Deutsche Bank (DB) confirmed that preparatory work for a potential capital increase and further strategic measures.