Drumming up cash
September 13, 2010
Deutsche Bank is aiming to raise at least 9.8 billion euros ($12.4 billion) as it seeks a takeover of Germany's Postbank.
The bank, which is looking to reduce its reliance on investment banking, will create more than 300 million new shares based on its own assets to generate the finance needed.
Shareholders will be offered an initial special price of 31.8 euros per share, the bank said in a statement on Sunday.
"Through this capital increase, Deutsche Bank intends to secure the equity capital required for a planned consolidation of Postbank," Deutsche Bank chief executive Josef Ackermann.
"As a result, we can expand our strong position in our home market, take a leading position in the European retail banking business and significantly enhance Deutsche Bank's revenue mix," he added, saying that the present focus was on investment banking.
Shares fall over planned move
Deutsche Bank shares closed at 47.70 euros on Friday, having fallen by around 5 percent when news of the planned capital increase leaked out.
The equity generated would be used to consolidate an existing stake in Postbank, Deutsche Bank. However, it added that the money would "also support the existing capital base to accommodate regulatory changes and business growth."
New rules
Banks are eager to obtain new capital and revenue streams after global regulators meeting in Switzerland on Sunday agreed on new rules for banks.
The Basel III regulations mean that the cushion of solid "rainy day" assets, as a percentage of the amount that banks can lend will be raised from 2 to 7 percent.
Deutsche Bank currently owns almost one third of the equity in Postbank, which has Germany's largest retail banking network. Postbank will also need fresh capital to meet so-called Basel III regulations.
Author: Richard Connor (AFP/Reuters/AP)
Editor: Rob Turner