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Stakes high as Deutsche Bank's capital hike looms

Monday, March 20, 2017 - 01:44

Deutsche Bank, which is seeking to raise 8 billion euro ($8.6 billion) from shareholders, has predicted that group revenues would be steady in 2017 as it reported a strong start to the year in bond trading. But, as Sonia Legg reports, shares in Germany's largest bank still fell after it gave details of its capital increase on Sunday and followed up with its annual report.

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Strong bond trading since the start of the year has given Deutsche Bank new hope. But the annual report's positive outlook for 2017 wasn't enough to prevent shares falling yet again - the roughly 5 percent fall virtually wiped out gains made this year. Worries about another cash call - the fourth since 2010 - was the main negative. On Tuesday the German lender will issue 687 million new shares at 11.65 each - in the hope of raising 8 billion euros. (SOUNDBITE) (German) HEAD OF CAPITAL ANALYSIS AT BAADER BANK, ROBERT HALVER, SAYING: "A capital increase with this kind of share level is obviously not pleasant. Deutsche Bank has to make money in order to get the problems they still have off the table. They have to clean up." A clean up is underway but it's a slow process. The bank did bring down compensation levels in 2016, halving to 316 the number of staff earning more than a million euros. But employee numbers have only fallen slightly from 2010. And 2016 was a year of heavy losses and multi-billion dollar legal penalties. (SOUNDBITE) (English) JEREMY BATSTONE-CARR, INDEPENDENT MARKET ANALYST "The great concern is that we have had new strategies before and they haven't gone anywhere. The company is eating through previous capital, raised from capital raising ventures and may in due course, if the latest strategy doesn't work, require the company to demand yet more from its shareholders, over and above what it has already received." Chief executive John Cryan insists the future is looking brighter, thanks to an economic recovery in Europe and higher interest rates in the States. But Deutsche Bank has consistently lagged rivals. And long-suffering shareholders are running out of patience.

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Stakes high as Deutsche Bank's capital hike looms

Monday, March 20, 2017 - 01:44