FRANKFURT–Deutsche Bank AG (DBK.XE0 shares fell steeply early Monday on news the lender plans to shore up its capital through an 8 billion euro ($8.5 billion) share sale.
At 0805GMT, Deutsche Bank shares traded down 6.3% at EUR17.93.
Deutsche Bank said on Sunday the subscription price for the share issue would be EUR11.65, a 39% discount to Friday’s closing price of EUR19.14. The timing of the share issue follows recent gains in the bank’s share price, which has nearly doubled from multiyear lows around EUR10 hit in September.
Deutsche Bank’s decision to tap markets for the third time since 2013 was not wholly unexpected. The lender has tried to strengthen its capital position by slashing costs, stopping bonuses and suspending dividend payouts. But those measures have been undermined by giant legal costs, tight capital regulations and weak profits in important business areas.
On Sunday, Chief Executive John Cryan also said the bank would keep its Postbank retail-banking unit and recombine its deal-advisory business with its large trading unit, reversing decisions taken in 2015.
The plan will address the bank’s weak capital position, analysts at S&P Global said. At the same time it highlights the bank’s restructuring difficulties since both the capital increase and the decision to retain Postbank mark a U turn from a long-standing strategy, according to the analysts.
The bank said it expects around EUR2 billion in costs related to those plans, but said the moves should reduce its borrowing costs.
–Jenny Strasburg contributed to this article.
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View more information: https://www.marketwatch.com/story/deutsche-bank-shares-dive-as-it-plans-rights-issue-2017-03-06