Deutsche tops up capital with €6.75bn issue

Tim Wallace
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INVESTORS in Deutsche Bank can snap up new shares at a 24 per cent discount, the banking giant announced yesterday.

Existing shareholders will be diluted by the German lender’s €6.75bn (£5.5bn) capital raising round, so the blow has been sweetened with the lower price on the stock.

The shares priced at €22.50, 24 per cent below the €29.79 at which the shares opened yesterday.

Existing investors get the first bite at the 299.8m new shares – for every 18 shares they already hold, they have the right to buy another five at the discounted price.

Major investor Paramount Services Holdings had already exercised its right to buy the shares, snapping up €1.75bn-worth last month, and taking the total fundraising up to €8.5bn.

The bank is raising the funds in a bid to end any doubts in the markets about the strength of its capital position, taking its core tier one ratio from 9.5 per cent to 12 per cent.

The bank’s leverage ratio is up from 2.5 per cent to 3.4 per cent as a result.

“We have taken decisive steps to protect Deutsche Bank against known capital challenges, sharpen our competitive edge, and accelerate investments in growth in all our business divisions,” said co-chief executives An-shu Jain and Jurgen Fitschen.

However, more pain could be on the way for the bank – analysts at Credit Suisse this week warned it may need to put aside another $3.9bn (£2.3bn) over the coming years to cover litigation bills from regulators across the globe.

Deutsche Bank’s shares fell 3.84 per cent yesterday.