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Deutsche Bank shares hit by cash call | |
(about 11 hours later) | |
Shares in Deutsche Bank fell 5% in early trading on news it plans to bolster its finances through selling new shares. | |
Germany's biggest bank plans to raise about 8bn euros (£6.9bn, $8.5bn) through the sale, due later this month. | |
The sale by the troubled bank is part of a wider shake-up. | |
Deutsche will also partially float its asset management business and retain Postbank - the retail banking business that it had been expected to sell. | |
The company will be reorganised around three divisions: private banking and wealth management; asset management; and corporate and investment banking. | |
The bank is trying to reshape itself after grappling with huge losses and a 15bn euro legal bill imposed by regulators since 2012. | |
In December, Deutsche Bank said it had agreed a $7.2bn (£5.9bn) payment to US authorities to settle an investigation into mortgage-backed securities. | In December, Deutsche Bank said it had agreed a $7.2bn (£5.9bn) payment to US authorities to settle an investigation into mortgage-backed securities. |
The sale of residential mortgage-backed securities played a significant role in triggering the 2008 financial crisis. | The sale of residential mortgage-backed securities played a significant role in triggering the 2008 financial crisis. |
Peter Hahn at the London Institute of Banking and Finance said it was the first capital raising from Deutsche since it had drawn a line under many of its legacy issues. | Peter Hahn at the London Institute of Banking and Finance said it was the first capital raising from Deutsche since it had drawn a line under many of its legacy issues. |
"The atmosphere for banks has got much more positive in the last several months," Mr Hahn told the BBC. Deutsche Bank shares have risen 44% in the last six months, for example. | "The atmosphere for banks has got much more positive in the last several months," Mr Hahn told the BBC. Deutsche Bank shares have risen 44% in the last six months, for example. |
But there were still question marks over whether its investors would "put money in one more time", he said. | But there were still question marks over whether its investors would "put money in one more time", he said. |
Deutsche will also promote chief finance officer Marcus Schenck and retail banking boss Christian Sewing to become co-deputy chief executives under chief executive John Cryan. | Deutsche will also promote chief finance officer Marcus Schenck and retail banking boss Christian Sewing to become co-deputy chief executives under chief executive John Cryan. |
Mr Schenck will also become co-head of the investment bank alongside Garth Ritchie, who runs the bank's bond and equities trading activities. | Mr Schenck will also become co-head of the investment bank alongside Garth Ritchie, who runs the bank's bond and equities trading activities. |
Jeffrey Urwin, head of corporate and investment banking, will step down, and a new chief finance officer will be sought. | Jeffrey Urwin, head of corporate and investment banking, will step down, and a new chief finance officer will be sought. |
Deutsche aims to cut costs from 24.1bn euros to 22bn euros by 2018, as well as resume paying a "competitive dividend" to shareholders. | Deutsche aims to cut costs from 24.1bn euros to 22bn euros by 2018, as well as resume paying a "competitive dividend" to shareholders. |