Capital increase

Deutsche Bank Share Issue at 35-Percent Discount

FILE PHOTO – The headquarters of Germany’s Deutsche Bank is photographed early evening in Frankfurt
Source: Reuters

In the next two weeks, Deutsche Bank will sell 687.5 million shares priced at €11.65, or $12.50, the lowest in the price range that the bank considered.

The share price is 35 percent below the level Deutsche’s shares traded at on Friday.

The move will create a capital injection of €8 billion, or $8.6 billion, for the embattled institution.

The subscription issue gives current shareholders the right to acquire one share for every two they own. The rights issue will run from March 21 to April 6.

Germany’s largest bank is struggling with losses and fines from activities undertaken during the financial crisis and under its previous leadership duo, Jürgen Fitschen and Anshu Jain.

Chief Executive John Cryan long resisted a move to raise capital but has been unable to sell the bank’s retail division Postbank, which will now be reintegrated into the business. This and the capital injection were among a set of measures the bank announced ten days ago, which also included restructuring and job cuts.

The bank revealed the price at a roadshow on Sunday. According to financial circles, at this price, demand is expected to be strong.

Deutsche also announced that the number of banks underwriting the transaction had increased to 30 from eight.

The subscription issue gives current shareholders the right to acquire one share for every two they own. The rights issue will run from March 21 to April 6.

On Monday the bank will publish its prospectus for the capital increase along with its annual report.

Robert Landgraf leads Handelsblatt’s coverage out of Frankfurt. To contact the author: landgraf@handelsblatt.com