Deutsche Bank will issue new shares to raise at least $8.5 billion and undergo restructuring in moves to turnaround the German banking giant. Deutsche Bank has posted more than 8 billion euros of net losses in the past two years as Cryan, who took over in 2015, settled misconduct investigations and scaled back capital-intensive debt-trading businesses.
Cryan was asked if Deutsche Bank would need to raise capital over the next one to three years.
The plan to offer shares in the asset management business must be approved by German financial regulator BaFin.
Losses and mounting legal bills raised doubts about Deutsche Bank's financial strength, which intensified after the United States justice department in September demanded $14 billion (€13.2 billion) to end an inquiry into mortgage securities that fuelled the 2008 financial crisis. Deutsche Bank AG has a 12-month low of €9.91 and a 12-month high of €19.95. Also, about 7,000 separate lawsuits and regulatory cases against the Frankfurt-based bank remain active.
The bank believes the plans will allow it to target a fully loaded common equity tier 1 capital ratio comfortably above 13 per cent and to pay a competitive dividend from 2018 onwards.
The timing of the capital increase seeks to take advantage of a resurgence in Deutsche Bank's share price, which has nearly doubled from multiyear lows near EUR10 in September.
That figure "will help us remove a source of uncertainty and thus reduce our refinancing costs", Cryan said, "and also increase confidence in us as a counter-party and encourage clients to deepen their relationship with us".
The bank will partially float its asset management business and retain Postbank - the retail banking business it had been expected to sell. Cryan will take direct oversight for the USA operations, and the firm is recombining its investment banking and trading units after splitting the two in 2015. The bank said it expects around EUR2 billion in restructuring and severance costs in connection with its plans. A stake sale would allow the lender to hold on to a business that Deutsche Bank officials including Mr. Cryan have praised as an important part of the bank.