Deutsche Bank AG, Germany’s largest lender, may have to bolster capital after Credit Suisse Group AG bowed to pressure from regulators and announced plans to raise 15.3 billion francs ($15.6 billion).
Credit Suisse’s move today leaves Frankfurt-based Deutsche Bank and France’s Credit Agricole SA as the two European banks with the weakest capital position, said Christopher Wheeler, an analyst at Mediobanca SpA with an underperform rating on the German lender. Deutsche Bank may use a September strategy day to update investors on its capital plans, he said.
“After the capital measures by Credit Suisse, Deutsche Bank is among the two weakest banks in Europe,” Wheeler said by telephone from London. “The pressure is on Deutsche Bank now.”
Global regulators are pushing lenders to raise capital and cut risk to prevent a repeat of the taxpayer-funded bank bailouts in the financial crisis of 2008. Under the latest round of rules from the Basel Committee on Banking Supervision, the largest banks will have to more than triple the core capital to at least 9.5 percent of assets, weighted for risk, by 2019.
Deutsche Bank estimates its core Tier 1 capital ratio will fall to 7.2 percent by the start of 2013 under the full Basel III rules, according to a company presentation on April 26.
“If earnings disappoint, Deutsche Bank may have to raise capital as well,” said Guido Hoymann, an analyst at Bankhaus Metzler with a buy rating on the bank. “The market may well have priced in a capital boost as the share price is very depressed.”
Deutsche Bank stock has fallen almost 13 percent this year, compared with the 2.4 percent decline in the Bloomberg Europe Banks and Financial Services Index. The shares rose 1.9 percent to 25.66 euros in Frankfurt today.
Co-chief executive officers Anshu Jain and Juergen Fitschen said in an interview with die Welt on June 2 that the bank will be able to bolster capital on its own.
Armin Niedermeier, a Deutsche Bank spokesman, declined to comment on analyst reports.