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Published: Mon, March 06, 2017
Economy | By Melissa Porter

Deutsche Bank board to meet Sunday to discuss capital hike

Deutsche Bank board to meet Sunday to discuss capital hike

Deutsche Bank AG launched an 8 billion-euro ($8.5 billion) share sale and said it plans to sell a stake in its asset management unit in the next two years as Germany's largest lender seeks to shore up capital after two consecutive years of losses.

The confirmation followed a wild day of trading for Deutsche Bank shares Friday after reports it was looking at capital raising options, falling as much as 4% before rallying to close at €19.25 each, a small 0.69% decline from Thursday's close.

The plan to offer shares in the asset management business must be approved by German financial regulator BaFin.

Deutsche Bank AG is a Germany-based global investment bank.

The new structure will consist of a Private & Commercial Bank, Deutsche Asset Management and a combined Corporate & Investment Bank.

In an interview seven weeks ago with CNBC, Cryan said that hiking capital was not the best option to improve its financial situation.

The bank said the share sale would boost its common equity Tier 1 ratio to 14.1 percent and set a new target of "comfortably above" 13 percent.

This follows a torrid 18 month period for the German bank, during which it has faced a litany of litigation battles with USA and European authorities, thousands of layoffs, deep cuts to its compensation pool and several management reshuffles.

The timing of the capital increase seeks to take advantage of a resurgence in Deutsche Bank's share price, which has nearly doubled from multiyear lows near EUR10 in September.

The bank will partially float its asset management business and retain Postbank - the retail banking business it had been expected to sell.

A renewed focus on Germany is a new direction for the bank, as many of its 8,000 open legal cases worldwide date back to its attempts to go toe-to-toe with British and American banking giants before the financial crisis.

Meanwhile, the group will "take advantage of the resurgence in client activity" in corporate and investment banking and find more savings by merging its corporate finance, global markets and global transaction banking units into a single division.

Deutsche Bank plans to issue a prospectus for the share sale on March 20th, subject to regulatory approval, and existing shareholders can subscribe to the offering until April 6th, according to the statement.

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