Deutsche Bank shares plunge on mooted rights issue

Deutsche Bank shares plunged in morning trade yesterday on press reports that it would raise up to €9 billion to bolster its capital as banking regulators finalise tough new rules for the industry.

The rights issue could also finance a takeover by the biggest German bank of Postbank, which has the country’s largest retail network, an analyst said.

Deutsche Bank shares lost 5.24 per cent to €47.4 as the DAX index of German blue chips showed a decrease of 0.21 per cent overall.

The bank aims to announce the offering on Monday or Tuesday, in what will be the largest rights issue by a European bank this year, the Financial Times said, citing people close to the plan.

The issue would raise between €8 bilion and €9 billion. Deutsche Bank’s current market value is €30 billion, according to the FT.

“The revenues shall be used to finance the complete purchase of Postbank, which would basically double Deutsche Bank’s client base in Germany and make the bank less dependent on investment banking,” Barclays Capital economist Thorsten Polleit said. Deutsche Bank currently owns one-third of the equity in Postbank.

The news came ahead of a meeting tomorrow of global banking regulation chiefs in Basel, Switzerland, to approve new capital and liquidity measures drawn up by the Basel Committee on Banking Supervision, an international watchdog.