FRANKFURT (Reuters) - Deutsche Bank (DBKGn.DE) is preparing for a potential capital increase of about 8 billion euros ($8.5 billion) as it seeks to strengthen its balance sheet and free up funds for strategic investments after years of restructuring.
In a statement on Friday, the bank said it was also examining several strategic measures including an initial public offering of a minority stake in its asset management business as well as retaining its Postbank unit and integrating it into its other German retail business.
These steps depend on market conditions and the approval of Deutsche Bank’s management and supervisory boards, the German flagship lender said, adding that no decision had been made on the matter yet.
Earlier on Friday, a person close to the matter said that Deutsche Bank DBGKn.DE would soon inform investors and shareholders about adjustments to its future strategy.
A final decision about the strategy adjustments as well as a possible share sale are expected at the end of March, following a meeting of the bank’s supervisory board on March 16 and 17, the person said.
The move comes after Deutsche Bank posted a net loss of 1.9 billion euros in the final quarter of 2016 as legal costs for past misdeeds weighed heavily on results and the bank fell further behind its Wall Street rivals, lagging their strong rebound in bond trading.
While Deutsche Bank has drawn a line under some major legal headaches, earmarking 4.7 billion euros of its 2016 litigation reserves for settlements of issues such as the sale of toxic mortgages and sham Russian trades, it is not yet out of the woods as some new civil lawsuits have emerged.
According to analysts, Deutsche Bank may see its asset management arm, which includes its mainstay DWS retail asset management brand, valued at 8 billion euros in a potential IPO.
The asset management unit has been touted as a potential divestment target at various times in the past. However, Deutsche Bank has always said that it would not shed the business.
Earlier this year, Deutsche Bank CEO John Cryan had said that a capital plan is not the bank’s base case plan.
“Our strong preference was not to raise fresh capital ... but I know never to say never,” he said in Davos.
Reporting by Kathrin Jones and Anika Ross; Writing by Christoph Steitz; Editing by Georgina Prodhan and Maria Sheahan