Deutsche Bank is bulking up. That is, Deutsche Bank (DB) is bulking up on capital to support its business going forward. The global bank has announced a Eur8 billion capital raising exercise and also made some key strategic decisions for its 2020 Plan. The impact of this exercise will raise its CT1 levels, currently at 12%, to over 14%, and improve its leverage ratio from 3.5% to 4.1%, according to Moody's (March 8th, 2017). At the targeted levels, DB will rival HSBC, UBS and MS as a well-capitalised global banking player. It's capital raising will be underwritten and fully-placed, so this appears to be a low risk outcome.
DB will also incorporate the Deutsche Postbank platform within its domestic bank, issue an initial (and partial) IPO of Deutsche Asset Management, and create two deputy CEO positions to frame future succession planning. Capital raising of this magnitude is very positive for depositors and bondholders alike as undue risk taking becomes more remote. Moreover, in my eyes, it can shut down the capital issue which has been plaguing the lender, barring any unexpected further surprises relating to conduct charges.
DB is bulking up, and that is a good thing for its lenders, counterparties, and depositors, and mitigates systemic risk concerns that have existed over the past one year. This represents a victory for market discipline, following the IMF's efforts to name the bank the largest single contributor to global systemic risk. And it is good for its business and confidence building. It also bulks up its domestic footprint on the back of these strategic decisions. For more information, see https://www.db.com/newsroom_news/2017/ghp/a-message-from-john-cryan-on-capital-increase-and-strategy-of-deutsche-bank-en-11482.htm.
DB is bulking up, and that is a good thing for its lenders, counterparties, and depositors, and mitigates systemic risk concerns that have existed over the past one year. This represents a victory for market discipline, following the IMF's efforts to name the bank the largest single contributor to global systemic risk. And it is good for its business and confidence building. It also bulks up its domestic footprint on the back of these strategic decisions. For more information, see https://www.db.com/newsroom_news/2017/ghp/a-message-from-john-cryan-on-capital-increase-and-strategy-of-deutsche-bank-en-11482.htm.
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