By Arno Schuetze
FRANKFURT (Reuters) - Deutsche Bank (DE:DBKGn) completed its latest capital increase on Friday, raising 8 billion euros ($8.5 billion) to make fresh investments, pay legal penalties and keep regulators happy.
The German bank's fourth capital hike since 2010, previously described by Chief Executive John Cryan as a last resort, involved selling 687.5 million shares for 11.65 euros each, with about 80 percent of shareholders buying the new shares, while the rest sold their rights, sources told Reuters.
Cryan has pledged to reward shareholders' trust by seeing through a turnaround of Deutsche, which some fear has lost its way as it struggles to remain a global universal bank while tackling the costs of pre-financial-crisis penalties.
Deutsche Bank has now raised some 30 billion euros over seven years, just below its market value of 32.5 billion euros.
The move was backed by its top shareholders - a group of Qatari investors, U.S. fund Blackrock (N:BLK) and China's HNA Group - whose stakes and influence over Germany's biggest bank would otherwise have been diluted, one source said.
HNA, which first disclosed its holding in February, had already hiked its stake last month.
Take-up of the subscription rights was 98.9 per cent and those that were not subscribed to will be sold in the market. The price represented a discount of 26 percent to Deutsche Bank's share price before the offer was launched, adjusted for the value of the subscription rights. The next big step in Deutsche's reorganization, announced last month, is a plan to list a minority stake of its asset management business, which includes its mainstay DWS retail asset management brand. While a listing is no longer needed to get capital in line with regulatory demands - its capital ratio will now rise to 14.1 percent compared with the ECB's minimum requirement of 9.5 percent - it could help lift Deutsche's valuation. European banks on average trade just below their book value and Deutsche trades at half of its book value, while listed asset managers such as Schroders (L:SDR), Henderson (L:HGGH) and Aberdeen (L:ADN) trade at more than twice book value. Although Deutsche Bank has vowed to carry out the initial public offering within two years, people close to the matter say that the listing, which could value the asset management business at up to 8 billion euros, may be launched this autumn.
Deutsche Bank will only pull off the expected listing of 10-20 percent of the asset management business if equity markets are buoyant and it is able to fetch an attractive price, the sources said. "If the valuation looks too low, they'll just scrap the IPO plans," one of them said. A listing would also give the asset management division a paper currency for potential acquisitions and shares which could be used to incentivise management.
($1 = 0.9405 euros)