Sunday 5 March 2017 4:22 pm

Deutsche Bank to raise €8bn through rights issue, as it announces a slew of restructuring plans

Deutsche Bank revealed today it plans to bolster its capital by around €8bn (£6.9bn) through an issue of new shares.

The German lender also revealed a slew of restructuring plans, including keeping its Postbank division, streamlining its business model to focus on three key units of private and commercial banking, asset management and corporate and investment banking, and listing a minority stake in Deutsche Asset Management.

The bank also announced a shakeup to its management board, including appointing Marcus Schenck, current finance chief, and Christian Sewing, chief executive of Germany and head of private, wealth & commercial clients, as deputy chief execs with immediate effect. Meanwhile, Jeffrey Urwin, currently head of the corporate & investment bank and the bank's US business, will retire following a transition period.

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Deutsche Bank said it plans to issue as many as 687.5m new shares, and the subscription period is expected to run from 21 March until 6 April.

The issue is being underwritten by a number of other banks, including Credit Suisse, Barclays, Goldman Sachs, BNP Paribas, Commerzbank, HSBC, Morgan Stanley, and UniCredit, while Deutsche Bank itself is acting as global coordinator and joint bookrunner. 

Meanwhile, the cost of the restructuring plans, including any severance costs, is expected to be roughly €2bn. These will be incurred between 2017 and 2021, although about 70 per cent will hit the bank's books in the next two years. 

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The German bank has not specified any further job losses from the newly announced restructuring. It is still working its way through a 9,000 jobs redundancy programme, which it announced in October 2015

The bank believes the plans will allow it to target a fully-loaded common equity tier 1 (CET1) capital ratio comfortably above 13 per cent and to pay a competitive dividend from 2018 onwards. 

"Our decisions are a significant step forward on the path to creating a simpler, stronger and growing bank," said chief executive John Cryan. "The capital increase will reinforce our financial strength substantially. The new three-pillar structure of our operating business should position us for significant growth, both in revenues and earnings."

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Today's announcement follows a statement made by the bank late last week, where it said it was mulling a potential multi-billion capital raising plan. 

The bank revealed at the start of last month that, although it was making its way back to a profitable position, it was still €1.4bn in the red for 2016. Its CET 1 ratio at the end of last year stood at 11.9 per cent.

Deutsche Bank also recently agreed a $7.2bn (£5.9bn) fine with the US Department of Justice for mis-selling mortgage-backed securities. At one point, it was speculated the penalty could set the bank back as much as $14bn.