Deutsche Bank Shares Soar -- Update

By Andrea Thomas

Shares in Deutsche Bank AG rose 13% on Wednesday following news that the German lender is considering buying back some of its debt.

The rally follows sharp falls in Deutsche Bank's share price in recent sessions. Shares in the bank have fallen 31% so far this year amid a broader selloff among European lenders on investor concerns about lenders' capital buffers and ability to navigate volatile markets.

The selloff has prompted concerns in Germany that the instability in the financial sector could spread to the real economy.

The German Chambers of Commerce, or DIHK, which represents some three million businesses, on Wednesday said the ability of small- and medium-size companies to secure financing could be compromised.

"There is nobody who is happy about what's happening right now," said DIHK managing director Martin Wansleben. "We need strong banks."

So far the pain being endured by Europe's banks has been broadly attributed to investors expressing specific doubt about individual banks, the sector and the strength of global growth. But signs or suggestions that businesses and individuals are feeling knock-on effects are likely to deepen concern.

Deutsche Bank shares rebounded strongly Wednesday after a person familiar with the matter confirmed the lender's executives had been discussing buying a chunk of its own debt to convey their view that the market is undervaluing its securities. The plans were first reported by the Financial Times.

Germany's finance minister, Wolfgang Schäuble, said Tuesday that he has "no concerns about Deutsche Bank," at a finance conference in Paris. A Finance Ministry spokeswoman said Wednesday that the government has no plans to hold top-level talks about Germany's banks.

Also on Tuesday, Deutsche Bank co-Chief Executive John Cryan wrote in a letter to colleagues that the German lender remains "rock-solid," despite the pasting being taken by its shares.

The bank has been among the worst-hit among big investment banks hammered recently amid concerns about worsening market conditions and banks' vulnerability to losses.

Mr. Cryan went on to reassure them that the bank's financial plans already include enough cash set aside to pay bondholders and legal bills, but conceded that some investors don't appear convinced, as evidenced by "recent market concern."

Investors around the world are concerned about a number of factors, including slowing growth, depressed energy prices and the prospect of negative interest rates in several major economies. When rates are negative, central banks charge lenders for holding reserves, a factor that could hurt bank profits.

Christian Grimm in Berlin contributed to this article.

Write to Andrea Thomas at andrea.thomas@wsj.com

(END) Dow Jones Newswires

February 10, 2016 06:58 ET (11:58 GMT)

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