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Deutsche in capital increase

May 19, 2014

Economists have largely praised Deutsche Bank for its plan to raise billions of euros in fresh capital from a Qatari investor. They said it would make it easier for the lender to pass a thorough ECB assets test.

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Deutsche Bank logo
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Analysts widely welcomed Deutsche Bank's recapitalization effort on Monday, saying it would give the German lender more leeway in an assets quality and capital stock test by the European Central Bank, which later this year is to take over supervision of the eurozone's largest banks.

"Shares will be diluted, but the volume of recapitalization sought by Deutsche should be big enough to end all debates of whether it has enough capital or not," Mainfirst analyst Kilian Maier told Reuters.

Deutsche Bank had announced it was seeking to raise 8 billion euros ($11 billion) in fresh capital, marking the second biggest recapitalization in the lender's history.

Regulators not involved

Deutsche said it would raise 1.75 billion euros from a Qatari investor, Paramount Holding Services, and then sell 300 million shares for 6.3 billion euros in a second phase.

By and large, we welcome the bank's move, although it might cause shares to become more volatile," said economist Ingo Frommen, from the German credit institute LBBW. "But we continue to be convinced of a successful restructuring at the bank."

Deutsche Co-CEO Anshu Jain said Monday no pressure had been exerted from regulators to speed up the recapitalization process.

hg/rc (Reuters, AFP)