Deutsche Bank Shares Fall on Rights Issue Plan
March 06 2017 - 3:47AM
Dow Jones News
By William Wilkes
FRANKFURT--Deutsche Bank AG (DBK.XE0 shares fell steeply early
Monday on news the lender plans to shore up its capital through an
8 billion euro ($8.5 billion) share sale.
At 0805GMT, Deutsche Bank shares traded down 6.3% at
EUR17.93.
Deutsche Bank said on Sunday the subscription price for the
share issue would be EUR11.65, a 39% discount to Friday's closing
price of EUR19.14. The timing of the share issue follows recent
gains in the bank's share price, which has nearly doubled from
multiyear lows around EUR10 hit in September.
Deutsche Bank's decision to tap markets for the third time since
2013 was not wholly unexpected. The lender has tried to strengthen
its capital position by slashing costs, stopping bonuses and
suspending dividend payouts. But those measures have been
undermined by giant legal costs, tight capital regulations and weak
profits in important business areas.
On Sunday, Chief Executive John Cryan also said the bank would
keep its Postbank retail-banking unit and recombine its
deal-advisory business with its large trading unit, reversing
decisions taken in 2015.
The plan will address the bank's weak capital position, analysts
at S&P Global said. At the same time it highlights the bank's
restructuring difficulties since both the capital increase and the
decision to retain Postbank mark a U turn from a long-standing
strategy, according to the analysts.
The bank said it expects around EUR2 billion in costs related to
those plans, but said the moves should reduce its borrowing
costs.
--Jenny Strasburg contributed to this article.
-Write to William Wilkes at william.wilkes@wsj.com
(END) Dow Jones Newswires
March 06, 2017 03:32 ET (08:32 GMT)
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