Deutsche Bank AG said it would raise 8 billion euros (US$8.6 billion) by selling stock at a 35 percent discount to last week’s closing price as Germany’s largest lender seeks to shore up its finances and boost growth.
The company is to issue 687.5 million new shares at 11.65 euros each, it said in a statement on Sunday, in line with the firm’s March 5 announcement on the planned sale.
The offer compares with the stock’s closing price of 17.86 euros on Friday, and is almost 41 percent lower than where the stock traded when Bloomberg first reported that the bank was weighing a capital raising.
Investors would be able to acquire one new share for each two they now hold.
The sale, which is to run from today through April 4, would be the fourth capital infusion for Deutsche Bank since 2010.
Chief executive officer John Cryan, who had previously said he did not want to tap shareholders, reversed course this month after the shares almost doubled from their September last year low and Deutsche Bank was unable to find a buyer for a consumer banking unit.
Even after slipping this month ahead of the capital increase, the stock is still up 80 percent from an intraday low on Sept. 30, last year, amid renewed optimism for banks as investors speculate economic growth and rising borrowing costs could revive earnings.
“The environment for the share sale is almost perfect, given the expectation of higher interest rates and buoyant equity markets,” Ingo Frommen, an analyst with LBBW who has a “hold” recommendation on the stock, said ahead of Sunday’s announcement.
Germany’s largest lender has posted more than 8 billion euros of net losses in the past two years as Cryan settled misconduct cases and scaled back risk in the investment bank.
He is trying to sweeten the offer with the promise of renewed dividends and a return to profitability this year.
The bank previously said that the latest share sale would boost its common equity tier 1 ratio, a key benchmark of financial strength, to 14.1 percent and vowed to keep it “comfortably above” 13 percent.
The measure stood at 11.9 percent at the end of last year.
The lender also said it will sell a minority stake in its asset management unit through an initial public offering in the next two years.
That, along with more minor asset disposals, would help raise at least another 2 billion euros of capital.
The bank is considering the sale of retail operations in India and European countries, including Spain, as part of the plans to boost capital levels, people with knowledge of the matter said earlier this month.