And just like that, European banks are back in capital raising mode, starting with what is perceived by some as Europe's strongest bank (alternatively, the most undercapitalized): Deutsche Bank, which at least check had a Core Tier 1 cap ratio somewhere south of 2%.
- DEUTSCHE BANK TO SELL UP TO 90 MLN NEW SHARES TO RAISE EU2.8B
- NEW SHARES WILL HAVE DIVIDEND ENTITLEMENT FOR 2012
- DEUTSCHE BANK SAYS NO PUBLIC OFFERING PLANNED
- DEUTSCHE BANK SHRS WILL BE PLACED VIA ACCELERATED BOOKBUILD
- PLANS ADDITIONAL CAP MEASURES OF UP TO €2 BILLION IN THE NEXT YEAR
- POTENTIAL ISSUANCE OF ADDED SUB CAP INSTRUMENTS
Since this is about 10% of the company's total float, the stock is not happy.
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The question why DB announced this just ahead of its earnings release should certainly make one ask just how well capitalized Europe (where every bank purports to having a fortress Basel III balance sheet) truly is?
From the release:
The Management Board of Deutsche Bank AG (XETRA: DBKGn.DE / NYSE: DB) resolved today, with the approval of the Supervisory Board, to execute a capital increase, which is intended to raise gross proceeds of approximately EUR 2.8 billion. The purpose of the capital increase is to strengthen the equity capitalisation of the bank.
It is intended to issue up to 90 million new shares from authorised capital excluding pre-emptive rights. The new shares will have full dividend entitlement for the fiscal year 2012. They will be placed with institutional investors by way of an accelerated book build offering. There will be no public offering. Deutsche Bank AG is acting as sole bookrunner for the offering.
Additionally Deutsche Bank intends to strengthen its total capital structure via the potential issuance of additional subordinated capital instruments of up to EUR 2 billion over the next twelve months.
The securities of Deutsche Bank AG mentioned in this release have not been registered under the Securities Act of 1933, as amended ('Securities Act') and may not be offered, sold or delivered within the United States absent registration under the Securities Act or an exemption from registration requirements.