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Reports: Blue-chip backing, asset manager IPO among Deutsche capital options

Some of Germany's top companies are interested in providingcapital to Deutsche BankAG in a bid to help the lender during its well-publicizedlitigation problems,Reuters reported Oct. 6, citing Handelsblatt.

Meanwhile, "people with knowledge of thediscussions" told Bloomberg News that Deutsche Bank is in informaldiscussions with senior advisers at a number of Wall Street firms about ways ofraising capital should it need to do so. Options under discussion include assetdisposals and a sale of shares, with the banks reportedly willing to underwritea cash call of roughly €5 billion, according to the report.

One frequently mooted sale target has been Deutsche Bank's assetmanagement division, and "several people briefed on the situation"told the Financial Times in an Oct. 7report that the lender is considering floating a minority stake in thebusiness, although not before the first half of 2017.

CEOs of the German blue-chips, which Handelsblatt did not name, have reportedly discussed the idea ofbacking Deutsche Bank and may acquire shares in the lender under an emergencyplan to strengthen its reserves. The capital injection under discussion wouldbe in the low single-digit billions of euros and the government welcomed theprivate sector intervention plan, the German newspaper said.

Germany's finance minister,Wolfgang Schäuble, declined to comment on whether the state would be ready tohelp rescue the bank, although the German government was earlier to be discreetlylobbying American authorities to assist the lender in quickly settling onallegations of mis-selling RMBS in the U.S. The Department ofJustice in September demanded $14 billion from Deutsche Bank to resolve theallegations, although the lender has rejected that amount and is reportedlylooking to paybetween $4 billion and $5 billion.

Deutsche Bank CEO John Cryan wasset to meet with the DOJ in Washington, D.C., on Oct. 7, one of the FT's sources said, adding that a dealwas unlikely to be reached during the meeting. Cryan is in Washington for theannual meetings of the World Bank and the IMF, the newspaper noted.

The €5 billion figure cited by Bloomberg on Oct. 6represents the most Deutsche Bank could raise by selling shares at a discountwithout having to ask shareholders for approval, the newswire's sources said. Ashare sale could follow the announcement of a settlement with the DOJ, althoughthe people said Deutsche Bank could still opt against raising capital.

The bank could generate €2 billion to €3 billion of capitalthrough a partial listing of the asset management business, the FT noted.