Deutsche Bank vows to avoid capital raise as ECB cuts burden

Bloomberg

Deutsche Bank AG Chief Executive Officer (CEO) Christian Sewing vowed that the bank will execute one of the largest restructurings in its history without the need for extra shareholder funds as he seeks to build credibility with investors.
The lender’s common equity Tier 1 ratio — a key metric of financial strength — will be above 13% throughout the end of the year, while the lender’s main regulator reduced its capital burden on the bank for next year as Sewing begins to shrink and simplify Germany’s biggest lender. The bank has said that it wants to keep its CET1 level at 12.5% or higher through 2022.
Sewing is rolling back years of aggressive expansion, when Deutsche Bank sought to compete as a global securities firm, and bolstering controls to avoid a repeat of misconduct charges that eroded its financial strength and reputation alike. The CEO is funding the overhaul by running a lower capital buffer, prompting some analysts to say the margin for error is slim and that the lender could be forced to tap long-suffering shareholders for fresh cash.
The bank “can stick to our commitment to manage our transformation without asking our shareholders for more capital,” Sewing said in a message to staff accompanying the bank’s first investor update in four years. Under previous CEOs, the company raised about 30 billion euros ($33.2 billion) in four capital increases since the financial crisis.
Citigroup analysts said that they cannot rule out a “highly dilutive” capital increase until there is more clarity on how European regulators implement new banking standards.