Deutsche Bank boosts finances with new capital
FRANKFURT, Germany (AP) — Deutsche Bank AG says its plan to raise 8 billion euros ($11 billion) in new capital from investors will strengthen its finances as it faces tighter regulation and uncertain costs from litigation.
Co-CEO Anshu Jain told analysts during a conference call Monday that the fresh capital would also help it meet “unforeseen challenges” that may lie ahead. Jain said it was “impossible to quantify” the additional demands regulators may place on banks as they press ahead with efforts to make the financial system more resistant to trouble.
Chief Financial Officer Stefan Krause said on the call that the bank also faced a “challenging and unpredictable litigation environment” even after setting aside billions for fines and lawsuits, much of it relating to events that occurred years ago.
The capital increase comes as banks across Europe have been shedding risky investments and raising new financial buffers as they seek to meet new regulatory standards. The European Central Bank is conducting a detailed review of large banks’ finances and holdings as it prepares to take over as the European Union’s centralized banking supervisor in November.
The bank said Sunday it would raise 6.3 billion euros through a rights offering in which investors are asked to stump up more money, and that it had already secured an additional 1.75 billion euros by placing shares with Paramount Holdings Services Ltd, an investment vehicle owned by Sheik Hamad Bin Jassim Bin Jabor Al-Thani of Qatar.
The move will increase the bank’s capital ratio, a key measure of financial strength, to 11.8 percent. That is well beyond the bank’s 10 percent goal.
The bank also said it intended to build up lines of business where it saw more potential for profit. More employees would be added to tend customers at its wealth management business and it would add to its operations in the United States. It also plans more spending on better technology.
Deutsche Bank shares traded down 1.9 percent at 30.24 euros in midday trading