Deutsche Bank announces 10-billion-euro rights issue
Germany's top bank, Deutsche Bank, announced the largest rights issue in its history Sunday, saying it would raise around 10 billion euros (13 billion dollars) to take over retail bank Postbank.
The issue would be "at least 9.8 billion euros", the bank said in a statement.
Industry sources told AFP it was the biggest rights issue ever for Deutsche Bank, and the second biggest in German history.
"Through this capital increase, Deutsche Bank intends to secure the equity capital required for a planned consolidation of Postbank," Deutsche Bank chief executive Josef Ackermann said in a statement.
"As a result, we can expand our strong position in our home market, take a leading position in the European retail banking business and significantly enhance Deutsche Bank's revenue mix," he added.
"Furthermore, with this capital increase we are strengthening the bank's equity capital in light of expected regulatory changes."
Deutsche Bank currently owns almost one third of the equity in Postbank, which has Germany's largest retail banking network.
The statement said Deutsche Bank would offer Postbank shareholders a price of between 24 and 25 euros per share for their holdings.
The news that Germany's biggest bank was seeking to bolster its capital came as leading central bankers and financial regulators met in Basel to hammer out a new framework aimed at preventing a repeat of the financial crisis.
Banks could have to significantly increase capital reserves that underpin lending to the wider economy, and possibly add an additional buffer, which some bankers warn could curb the amount of credit available to fuel an uncertain recovery.
Rumours of Deutsche Bank's move on Friday sent its shares sharply lower in Frankfurt as traders worried about what it meant for the firm's capital reserves and the effect of the rights issues on existing shareholdings.
© 2010 AFP