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September 13, 2010    

Deutsche Bank confirms €10bn cash call

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by Kay Murchie
Deutsche Bank confirms €10bn cash call

Germany’s largest lender, Deutsche Bank, has announced it will embark on a €10 billion (£8.1 billion) rights issue to take over retail bank, Postbank.

The announcement comes just a week or so after the National Bank of Greece launched a rights issue.

More lenders in Greece, Spain, Portugal and Italy are expected to follow suit to strengthen their balance sheets, according to analysts.

Meanwhile, in a statement, Deutsche Bank chief executive Josef Ackermann said: “Through this capital increase, Deutsche Bank intends to secure the equity capital required for a planned consolidation of Postbank.”

He added: “As a result, 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.

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

The cash call represents Germany’s largest but is still well below the £13.5 billion recently raised by Lloyds Banking Group and the £12.5 billion and £12 billion, raised by HSBC and Royal Bank of Scotland, respectively.

Meanwhile, the news of the rights issue comes as regulators and central bank governors met in Basel, Switzerland this weekend to discuss tougher capital rules.

The agreement could force banks to raise fresh equity in order to withstand future downturns in the global financial system.

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Tags: , Basel, , Postbank, regulators, , stricter rules


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