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Deutsche Bank shares drop on capital hike plan

Monday, March 06, 2017 - 01:24

Shares in Deutsche Bank fell almost 7 percent in early trading after the lender announced an 8 billion-euro ($8.48 billion) capital increase that Chief Executive John Cryan had previously declared a last resort. Sonia Legg reports

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Deutsche Bank has been trying hard to get itself into shape after damaging writedowns and litigation costs. Over the past 18 months, it's trimmed its portfolio, thown out bad clients and improved its technology, but it's still not healthy enough. And now, Germany's flagship lender is planning another capital increase - its fourth since 2010. Shares in the bank fell almost seven percent on the news, partly because CEO John Cryan had previously declared another capital hike 'a last resort'. He was hired almost two years ago to turn around the bank's fortunes. But its shares are now worth a third less than they were when he took the job and the lender is among the 10 weakest in Europe. The sector continues to struggle too - despite the prospect of higher interest rates. (SOUNDBITE) (English) VICKY PRYCE, CHIEF ECONOMIC ADVISOR, CEBR, SAYING: "People have borrowed an awful lot because rates are so low so they may not be able to afford those repayments if they go up, it depends of course how fast the interest rises takes place when it does. On the other hand they still have loads of non-performing loans on their books, so any rise in interest rates could potentially make that worse." Cryan has appointed two co-Deputy CEOs to help ensure this revamp bears fruit. Analysts say after this 8 billion euro capital increase he can't afford to ask for more any time soon.

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Deutsche Bank shares drop on capital hike plan

Monday, March 06, 2017 - 01:24