Deutsche Bank to raise 8 billion euros, plans major reorganization

Sun Mar 5, 2017 1:05pm EST
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By Arno Schuetze

FRANKFURT (Reuters) - Deutsche Bank (DBKGn.DE: Quote) plans to raise capital, list its asset management business and overhaul its business structure as it tries to reinvent itself after spending two years dealing with its past misdeeds and huge losses.

The strategic revamp, decided at a supervisory board meeting on Sunday, follows a net loss of 1.4 billion euros last year and is part of the lender's push to draw a line under a string of scandals that have hammered its balance sheet since 2012.

The decision marks a retreat from a strategy announced less than two years ago when the bank separated its investment banking and markets business, and heralds its fourth capital hike since 2010.

"On strategy, it's obvious we had a change of heart," Chief Executive John Cryan said on a call with journalists on Sunday afternoon.

"These measures will make Deutsche Bank stronger and place us back firmly on a path to sustainable growth".

Deutsche plans to launch an 8 billion euro ($8.5 billion) 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 euros.

The bank said it also plans to list a minority stake in its asset management business and sell off other assets to raise a further 2 billion euros which, with the rights issue, should take its capital ratio above 13 percent.

Deutsche will reunite its cash cow securities trading unit and corporate finance business under one roof, having separated them in 2015. The bank said those divisions, which will be combined with its transaction banking group, will now focus predominantly on serving corporate clients and less on institutional ones such as pension and hedge funds.   Continued...

The head quarters of Germany's Deutsche Bank are photographed early evening in Frankfurt, Germany, January 31, 2017.  REUTERS/Kai Pfaffenbach