Deutsche Bank announces to raise capital, plans additional measures and new financial targets after spending two years dealing with its past misdeeds and huge losses.
DB intends to launch an €8bn rights issue of 687.5 million new shares on March 21, priced at around a 39 percent discount to Friday’s closing price of €19.14.
The Bank plans a series of additional actions and sets new financial targets that replace the existing targets originally announced in October 2015. These measures are intended to strengthen the Bank’s status as a leading European bank with a global reach supported by its strong home base in Germany. The Bank intends to continue serving the needs of its clients across transaction banking, corporate finance, capital markets, asset management, wealth management and retail banking.
The bank will target an adjusted cost base (including Postbank) of about €22bn by 2018 and about €21bn by 2021, compared to €24.1bn in 2016 (after business disposals). It is anticipated that this will require restructuring and severance costs of approximately €2bn, the majority of which is expected to be incurred in 2017 to 2019. The bank will aim to reach a return on tangible equity of 10 percent in a normalised operating environment.
John Cryan, CEO said, “Our decisions are a significant step forward on the path to creating a simpler, stronger and growing bank. 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.”
The new three-pillar business division structure will be supported by a new leadership structure as decided by the Supervisory Board today. It will also encourage chief finance officer Marcus Schenck and retail banking boss Christian Sewing to become co-deputy chief executives under chief executive John Cryan. Mr Schenck will also become co-head of the investment bank alongside Garth Ritchie, who runs the bank’s bond and equities trading activities. Jeffrey Urwin, head of corporate and investment banking, will step down, and a new chief finance officer will be sought.
With regard to the capital increase and the strategic measures, Paul Achleitner, chairman of the supervisory board commented, “After the difficult restructuring of recent years, the Supervisory Board is convinced that these strategic, financial and personnel measures provide a firm foundation for sustainable growth. We are and will remain a bank rooted in Germany and Europe and with a sizeable presence in the global business with corporates, institutions and wealth management clients.”