The First To Defect Wins: Deutsche Bank Planning €9 Billion Capital Raise
Rumors circulating in the market, stoke by a Bloomber report, that the biggest German bank, the one whose assets are about as large as the GDP of its host country, is considering a share sale of up to €9 billion. DB is rumored to have approached banks about arranging a stock sale, although the firm has still not decided to whether to pull the trigger. This development is nothing less than a direct response to Basel III which is expected to require European banks to shore up tens if not hundreds of billions in new equity capital. And as usual the first one loses the least. This only means that all the ugly toxic waste accumulated under the rug in Europe's financial institutions is about to emerge.
More from Bloomberg:
Deutsche Bank AG has approached
investment banks to assess their interest in managing a stock
sale to raise as much as 9 billion euros ($11.4 billion), said
three people with knowledge of the discussions.
Germany’s biggest bank has yet to decide on the sale, said
the people, who declined to be identified because the plans are
confidential. The proceeds may be used to increase the bank’s
stake in Deutsche Postbank AG and to meet rising regulatory
capital requirements, the people said.
Deutsche Bank has the option to increase its almost 30
percent stake in Bonn-based Postbank, which currently has a
market value of 5.6 billion euros. Deutsche Bank Chief Risk
Officer Hugo Banziger said in an investor presentation in June
that the Frankfurt-based bank would only raise capital for
Deutsche Bank spokesman Ronald Weichert declined to comment
today. Deutsche Postbank AG Chief Executive Officer Stefan Juette, speaking at a banking conference in Frankfurt today,
said he doesn’t know if or when Deutsche Bank may take over the
In the past four years, Deutsche Bank acquired Berliner
Bank AG, Nuremberg-based Norisbank AG and the Postbank stake, as
well as ABN Amro Holding NV’s commercial-banking operations in
the Netherlands and private wealth manager Sal. Oppenheim Group.
Whether Deutsche Bank proceeds with a share sale will
depend on the financing commitment it gets from different banks,
one of the people said. Companies planning to sell stock
typically seek to find securities firms to guarantee the
offering, agreeing to buy stock that investors don’t order. Five
banks, including Deutsche Bank, agreed to underwrite National
Bank of Greece SA’s 2.8 billion-euro rights offering this week.
Proposed rules under consideration by the Basel Committee
on Banking Supervision may also lead banks to raise reserves.
Germany’s 10 biggest lenders, including Deutsche Bank and
Commerzbank AG, may need about 105 billion euros in fresh
capital because of new regulation, the Association of German
Banks estimated on Sept. 6.
The lenders would need to raise that sum to reach an
estimated 10 percent Tier 1 capital ratio, a key measure of
financial strength, according to Dirk Jaeger, who is responsible
for regulatory topics at the group.