Deutsche Bank board to discuss capital hike today

The lender, which has posted more than 8 billion euros (S$11.886 billion) of net losses in the past two years, has nearly doubled in market value from a September low, making a share sale more palatable.

The firm plans to cut more than €2 billion of costs from the €24.1 billion in adjusted expenses it had past year.

Deutsche Bank is not likely to realize the gains of restructuring immediately but might start getting them later in the year. In future, our focus will be incrementally on corporate clients whom we aim to serve in key areas ranging from financing and payments to hedging and advisory.

Deutsche Bank has unveiled plans to raise up to $8.5bn (£6.9bn) through the sale of 687.5 million new shares. It will also bring its securities trading business and corporate finance together and scrap the sale of its Postbank unit.

The measures mark a reversal for Chief Executive Officer John Cryan, 56, who had unsuccessfully sought to sell Postbank to avoid tapping shareholders. Instead, it now wants to reintegrate the operation into its other German retail business.

A merger of the bank’s global market division and corporate and investment banking division will create a single Corporate & Investment Bank, Cryan said. Global markets was run by Garth Ritchie, the bank’s head of equities.

“The overall mix of businesses becomes a little more stable”.

But the plan means current investors will take a hit: Deutsche Bank shares fell more than 4% in NY on Friday as reports of the hike emerged. Schenck last month said the lender would only sell Postbank if a deal provided “meaningful capital relief” to Deutsche Bank.

To conserve cash, the bank cut its bonus pool for 2016 performance by 80% – a move which will affect around 25,000 senior employees. Since 2010 Deutsche Bank has raised more than 20 billion euros in fresh capital, yet its market value stands at just 26.4 billion. Deutsche will retain a majority stake. Another large shareholder is undecided about the capital increase and will need convincing, a person familiar with the matter said. It has been rumored for long.

Paul Achleitner, chairman of Deutsche Bank’s supervisory board, said: “After the hard restructuring of recent years, the Supervisory Board is convinced that these strategic, financial and personnel measures provide a firm foundation for sustainable growth”.

Deutsche Bank shares fell 1.3% to €19.14 in Frankfurt on Friday.