Deutsche Bank plots issue, takeover - Germany’s biggest bank to raise billions, launch offer for Postbank

story by AP
photo by Getty Images of Deutsche Bank Headquarters
Germany's biggest bank, Deutsche Bank AG, on Sunday announced plans to raise at least €9.8-billion in a capital increase intended partly to finance a full takeover of retail lender Deutsche Postbank AG.

The planned issue of 308.6 million new common shares, for the equivalent of $12.4-billion U.S., is meant primarily to cover the consolidation of Postbank, “but will also support the existing capital base to accommodate regulatory changes and business growth,” Deutsche Bank said. It did not elaborate.

Deutsche Bank's shares had dropped on Friday on reports that it planned a huge stock issue. They finished 4.6 per cent lower in Frankfurt at €47.70.

Postbank shares went the other way — closing up 4.8 pe rcent on Friday at €27.04.

Deutsche Bank is Germany's biggest bank and currently owns 29.95 per cent of Postbank shares.

The bank, based in Frankfurt, said it plans to offer Postbank shareholders a cash payment equal to the volume-weighted average share price over the last three months. It expects to offer between €24 and €25 per share.

Deutsche Bank first moved in 2008 to buy a minority stake in Postbank from Deutsche Post AG.

It said it hopes to fully consolidate Postbank this year if the capital increase is successfully implemented — and would need to revalue its existing investment in Postbank, leading to a prospective third-quarter charge of about €2.4-billion.

A syndicate of banks acting as joint bookrunners agreed to underwrite the new shares at a preliminary subscription price of €31.80, ensuring gross proceeds of at least €9.8-billion, Deutsche Bank said.

The final subscription price will be determined and announced Sept. 20 “and will depend on further market developments,” it added.

Deutsche Bank also said that it plans to buy back up to 3.1 million shares between Monday and Thursday in an effort to reduce the number of shares that carry subscription rights.