Deutsche Bank Shares Rally on Capital Group Stake
February 06 2020 - 8:23AM
Dow Jones News
By Patricia Kowsmann and Pietro Lombardi
Shares of Deutsche Bank AG (DBK.XE) rallied Thursday after
Capital Group Cos., a large Los Angeles-based investment-management
firm, disclosed a 3.1% stake in the German bank.
The move by Capital Group, which has over $1.9 trillion in
assets under management, comes as Deutsche Bank is in the midst of
a deep restructuring of its businesses aimed at making it leaner
and profitable.
Last week the bank disclosed a $5.8 billion loss for 2019 on
costs associated with the revamp, but it said restructuring efforts
are on track, and in some cases ahead of schedule. It also reported
better-than-expected capital levels, shooing away fears it may
require shareholders to tip in to raise more.
Capital Group's stake makes it one of the bank's largest
shareholders after the Qatari Royal family, BlackRock Inc. (BLK)
and Hudson Executive Capital LP, which was the last to build a
stake in the bank back in 2018.
Shares of Deutsche Bank were up 9% midday Thursday. It is up 30%
so far this year, a sharp contrast to previous years when it
struggled to convince investors of its business model and was hit
by a series of legal challenges, including related to money
laundering. That performance makes it the second best-performing
stock in the Stoxx 600 index this year.
Like several European banks, Deutsche Bank is struggling to make
money while interest rates remain low or below zero. Adding to its
woes, its big investment-banking business--long its dominant
revenue engine--is also suffering from stiff competition from U.S.
peers.
After a failed attempt to merge with smaller German rival
Commerzbank AG (CBK.XE) last year, Deutsche Bank moved to shrink
and reorganize its global investment bank and focus on serving
European companies and retail-banking customers. It pledged to
slash costs and cut 18,000 of its approximately 92,000 jobs by
2022.
Capital Group has been a Deutsche Bank investor before, but not
in the past two years, according to a person familiar with the
holdings.
Write to Patricia Kowsmann at patricia.kowsmann@wsj.com and
Pietro Lombardi at pietro.lombardi@dowjones.com
(END) Dow Jones Newswires
February 06, 2020 08:08 ET (13:08 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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