After some strength in Europe overnight, Deutsche Bank shares are tumbling this morning after reports that the world's most systemically dangerous bank plans to review strategic options over coming weeks that include a capital increase and the partial sale of its asset management business.
As Bloomberg reports, the supervisory board is scheduled to meet on March 16 and March 17 to discuss potential measures, according to three people with knowledge of the plans, who asked not to be identified because they weren’t authorized to speak publicly. A stock sale would help Germany’s biggest bank replenish buffers that may come under pressure if it decides to reintegrate its Postbank subsidiary, said the people.
No decision has been made on whether to sell its own stock or hold an initial public offering of the asset management unit, said the people. A majority of the supervisory board favors reintegrating Postbank, accompanied by a capital increase, one of the people said.
A spokeswoman for Deutsche Bank declined to comment.
Chief Financial Officer Marcus Schenck last month said the lender would only sell Postbank if a deal provided “meaningful capital relief” to Deutsche Bank.
Deutsche Bank’s management board earlier planned to wait for the completion of new banking standards that could force the bank to hold yet more capital, including for Postbank, before finalizing fresh measures. After failing to deliver a deal in early January, global regulators meeting at the Basel Committee on Banking Supervision once again left the table this week without an agreement, fueling uncertainty over the timing.
At 11.9 percent at the end of 2016, the bank’s common equity Tier 1 ratio is still 60 basis points shy of its end-2018 target. With revenue under pressure from low interest rates, Deutsche Bank is also trying to build capital up organically by improving profitability. The lender has withdrawn from several countries and it recently announced that it will drastically cut bonuses for about a quarter of its staff.
