Deutsche Bank announces plans to raise fresh capital and reorganize structure

Tammy Harvey
March 6, 2017

Deutsche Bank AG will offer €8 billion of stock, sell part of its asset-management business and named two deputies to chief executive John Cryan as Germany's largest lender seeks to shore up capital after two consecutive years of losses.

Deutsche Bank also said Sunday it plans to fold its German retail-banking unit called Postbank back into its ongoing operations.

Selling a stake would dent the advantage Deutsche Bank gains from the asset-management division's profits, which are predictable compared with more-volatile investment-banking and trading profits.

In December, Deutsche Bank said it had agreed a $7.2bn (£5.9bn) payment to USA authorities to settle an investigation into mortgage-backed securities.

Deutsche will promote retail banking head Christian Sewing and finance head Markus Schenck to oversee the revamp as co-deputy CEOs alongside Cryan.

Schenck will also become co-head of the investment bank alongside Garth Ritchie, who now heads the bank's bond and equities trading activities.

It has spent the past 18 months trimming down its product offering, throwing out unprofitable clients and trying to get its convoluted information technology into better shape.

In December, Deutsche Bank said it would pay $7.2 billion to the US Department of Justice, related to its issuance and underwriting of residential mortgage-backed securities (RMBS) and other activities between 2005 and 2007. The bank has raised capital two others times in the past four years.

Numerous bank's investors see it as a necessary move despite the billions already plowed into the bank in the past seven years.

Deutsche Bank (DBGKn.DE) will soon inform investors and shareholders about adjustments to its future strategy, a person familiar with the matter told Reuters, adding a capital increase was among possible tools the lender could use.

"Deutsche Bank confirms that it is conducting preparatory steps for a potential capital raise of approximately Euro 8 billion and several potential strategic measures".

The share sale would "remove a major source of uncertainty".

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