Deutsche Bank AG (ETR:DBK) (FRA:DBK) (NYSE:DB) has announced plans to sell 90 million units of common stock in a bid to raise €2.8 billion. The company revealed the news in a press release that can be found in its entirety at here. According to the official statement, the bank needs to raise capital in order to strengthen its equity capitalization.
Deutsche Bank AG (ETR:DBK) (FRA:DBK) (NYSE:DB) currently has 928.1 million outstanding shares, meaning that the new issuance is relatively large. The firm’s current worth is just over $35.5 billion, around €30.5 billion. The new shares will not be offered to the public, and will instead be made available to institutional investors using a mechanism known as an accelerated book offering.
On today’s market, Deutsche Bank AG (ETR:DBK) (FRA:DBK) (NYSE:DB) shares were performing well. On their home exchange, shares in the company stood at €31.88 at time of writing, which represents a fall of 1.5 percent from today’s open. For the full year the firm’s shares have remained flat on worries about the ability of European Banks to deal with the continent’s crisis.
Deutsche Bank AG (ETR:DBK) (FRA:DBK) (NYSE:DB) will release its earnings report for the first three months of 2013 before the market opens on Tuesday morning. The company has had a roller-coaster of a month, being cleared on charges of fixing base interest rates in the Libor scandal, while being forced to offer new equity in order to secure its capital requirements.
Deutsche Bank AG (ETR:DBK) (FRA:DBK) (NYSE:DB) beat its capital reserve goals in its earnings report for the last three months of 2012, coming in at 8 percent for Core Tier 1 capital. For the quarter, the bank had only expected to reach a ration of 7.3 Percent. The bank obviously thinks that an additional offering of shares would be the quickest way to raise the extra capital needed to meet Basel 3 requirements and stabilize itself.
In the last quarter of 2012, the Deutsche Bank AG (ETR:DBK) (FRA:DBK) (NYSE:DB) earnings report showed that the company had lost almost $3 billion in three months. The firm’s outlook was cut in March by Goldman Sachs Group, Inc. (NYSE:GS) as its capital structure in the United States looked increasingly more vulnerable.
Investors and analysts alike will surely be looking forward to questioning bank executives on the decision to sell additional stock when the firm hosts its earnings conference call on Tuesday.