(Corrects dateline to June 3)
By Arno Schuetze and Kathrin Jones
FRANKFURT, June 3 (Reuters) - Deutsche Bank will price an 8 billion euro ($11 billion) capital increase on Wednesday, likely at a big discount, to fortify its balance sheet ahead of regulatory checks and to complete a costly restructuring.
Germany’s largest bank has spent the past two weeks marketing the rights issue to its shareholders with promises of both cost cuts and future growth.
Investors have broadly welcomed the issue, saying it will put concerns about capital weakness to rest for at least a year as co-Chief Executives Anshu Jain and Juergen Fitschen complete a turnaround plan.
“There is relief that they’ve finally got on and done it,” said David Moss, head of European equities at London-based fund manager F&C Asset Management which holds a small stake in the bank. “The amount they’re raising looks significant enough to get them to a level which looks satisfactory.”
Market participants contacted by Reuters pointed to a likely price range between 21 euros and 21.50 euros, which the bank is expected to set late on Wednesday.
A price of 21 euros would be close to the lowest possible level for Deutsche to fulfil its goals and close to the price indicated when it announced the deal. Deutsche plans to tap shareholders for 6.3 billion euros and place another 1.75 billion euros in shares with a member of the Qatari royal family.
That price would also represent a hefty discount of about 32 percent to the bank’s closing share price preceding the news, or about 27 percent to the theoretical share price accounting for dilution, according to Reuters calculations.
Deutsche sees itself as Europe’s last man standing in the investment banking sphere after a pull-back by Barclays , UBS and others left a gap that it aims to fill as a top debt trader.
It wants to fortify its position in North America and Asia in wealth management and investment banking while modernizing its domestic retail franchise in Germany.
But at least half of the new money will go to filling new capital demands triggered by regulatory reforms, bank officials have told investors.
In less than a year, banks participating in the balance sheet review led by the European Central Bank have raised more than 104 billion euros by raising new cash, withholding provisions and other measures, ECB officials have said.
Deutsche shares have fallen some 15 percent since the start of the year compared with a 4 percent rise on average by rivals , partly due to expectations of a dilutive capital hike.
Once the price is set on Wednesday, the subscription rights will be allowed to trade on the Frankfurt bourse. Current shareholders can sell their rights at that time or sign up to purchase new shares. The offer is expected to close on June 24.
Deutsche Bank declined to comment. (Additional Reporting by Jemima Kelly in London; Writing by Thomas Atkins; Editing by Erica Billingham)