Deutsche Bank AG, Europe’s biggest investment bank, said a planned 8 billion-euro ($11 billion) share sale was needed to meet stricter capital rules and retain its position as a global bank.
“It’s crucial that we address the tighter capital requirements in good time,” co-Chief Executive Officer Juergen Fitschen said in a copy of a speech to Deutsche Bank’s annual shareholder meeting in Frankfurt today. “To be a global leader, we must ensure that we have a strong capital base. It was our first priority to achieve this organically as far as possible.”
Investment banks across the globe are weighing how to weather a decline in revenue as clients hold off on trades and costs from lawsuits and regulatory probes eat into capital. Deutsche Bank said four days ago it would raise funds by tapping existing shareholders and an investment vehicle of former Qatari Prime Minister Sheikh Hamad Bin Jassim Bin Jabor Al-Thani.
Deutsche Bank, which had 3 billion euros in legal costs last year, was the second-worst capitalized of 16 global banks at the end of March after Royal Bank of Scotland Group Plc, according to data compiled by Bloomberg Industries. The company says the share sale will increase its capital adequacy ratio to 11.8 percent from 9.5 percent. That would place it third-highest after UBS AG and Nomura Holdings Inc., the data show.
Fines and probes for alleged manipulation of interest rates and currencies are taking away capital from banks as they seek to keep above minimum requirements set by the Basel Committee for Banking Supervision, a group bringing together regulators from 27 countries.
Fitschen said that he is aware a dividend of 75 cents per share the company has proposed to shareholders for 2013 is “not satisfactory in the long term.”
The bank’s shares rose 0.3 percent to 30.26 euros at 10:34 a.m. in Frankfurt. They have dropped 13 percent this year, the second-biggest decline in the 43-member Bloomberg Europe Banks & Financial Services Index after National Bank of Greece SA, which lost 43 percent.
Deutsche Bank is also asking shareholders to approve paying staff bonuses equivalent to twice annual wages. The consent sought today is needed under European regulations that otherwise limit bonuses to one-time salary.
Next month’s capital increase will be the bank’s biggest since it sold about 10 billion euros of shares in 2010 to fund its purchase of Deutsche Postbank AG.