Monday 23 April 2018

Deutsche planning €9.8bn share sale to fund Postbank bid

Aaron Kirchfeld

Deutsche Bank AG, Germany's largest bank, plans to raise at least €9.8bn selling stock to bid for Deutsche Postbank AG and meet stricter capital rules.

Deutsche Bank expects to offer between €24 and €25 a share in cash to Postbank stockholders to increase its 29.95pc stake in the lender, the Frankfurt-based bank said yesterday. The company intends to book a charge of about€2.4bn in the third quarter as it marks down the value of its existing Postbank holding.

Chief executive officer Josef Ackermann is preparing Deutsche Bank's largest-ever share sale as he seeks to reduce its dependence on investment banking by gaining control of Postbank, a consumer lender based in Bonn.

The capital increase, the biggest rights offer in Europe this year, will also help Deutsche Bank prepare for new rules requiring lenders to boost reserves.

"We can expand our strong position in our home market, take a leading position in the European retail banking business and significantly enhance Deutsche Bank's revenue mix," Mr Ackermann (62) said in an e-mailed statement yesterday.

"Furthermore, with this capital increase we are strengthening the bank's equity capital in light of expected regulatory changes."

Deutsche Bank said the offer is fully underwritten at a preliminary subscription price of €31.80 a share by a group of banks including UBS, Banco Santander, Bank of America Merrill Lynch, Commerzbank, Morgan Stanley and Societe Generale. The bank plans to publish a prospectus on the sale September 21.

Deutsche Bank expects to issue 308.6 million new shares in Germany and the US, it said. Shareholders will be able to purchase one new share for every two they own.

Deutsche Bank fell €2.32, or 4.6pc, to €47.70 in Frankfurt trading on September 10, giving the company a market value of €29.6bn. Postbank jumped €1.23, or 4.8pc, to €27.04, valuing the bank at €5.9bn.

Mr Ackermann, who has previously said the bank would only raise capital for acquisitions, is trying to build up the bank's so-called stable businesses of retail banking and asset management and reduce reliance on investment banking which accounted for 78pc of pre-tax profit in the first half.

In the past four years, Deutsche Bank acquired Berliner Bank and Nuremberg-based Norisbank, as well as ABN Amro Holding NV's commercial-banking operations in the Netherlands and private wealth manager Sal Oppenheim Group.

Deutsche Bank's bid for Postbank coincides with a global effort by regulators to impose rules that will avoid a repeat of the financial crisis, which caused writedowns and credit losses of almost $1.8 trillion (€1.4 trillion) worldwide, according to data compiled by Bloomberg. Deutsche Bank dodged the worst of the financial crisis and eschewed a state bailout. (Bloomberg).

Irish Independent

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