Deutsche Bank announces capital hike by 8 billion euros for major reorganization

Company - Mohit Shah - Mar 06,2017

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deutsche bank announces capital hike by 8 billion euros for major reorganization

Deutsche Bank plans a capital hike for repairing business structure after spending two years tackling with its past misdeeds as well as losses.

After a supervisory board meeting on Sunday, the decision for a capital hike by €8 billion was issued. The bank said in a statement, the implementation would take place on March 21.

Deutsche Bank said it also plans to file a minority stake fixed to its asset management business and sell off other assets with an aim to raise 2 billion euros which are expected to take its capital ratio well above 13 percent.

The balance sheet of the embattled firm has been hammered since 2012. This fresh decision marks a withdrawal from a strategy which was announced two years ago when Deutsche Bank separated its markets business and investment banking.

John Cryan, Chief Executive Officer of Deutsche Bank said in a press release that, the firm’s decisions are a significant step taken forward on a correct path to form a “simpler, stronger and growing bank”.

It is also reported that Deutsche will unify its cash cow securities trading unit along with corporate finance business under the same segment. The bank further added that those divisions, which will be united with its transaction banking group, will predominantly focus on serving corporate clients.

The bank has spent the last 18 months throwing out unprofitable clients, cutting down its product offering, and putting in efforts to get its intricate information technology on a better track.

The struggling business structure and the $7.2 billion settlement with the U.S. Department of Justice for trading toxic mortgage-backed securities in December had shaken the bank’s balance sheet. A more radical action is needed to strengthen the firm’s status.