German lending giant Deutsche Bank aims to raise shareholder finance as it plans to take over high street operation Postbank. The bank wants to move further into retail banking as new rules loom for investment outfits.
Deutsche Bank is eyeing up Postbank in a bid to diversify
Deutsche Bank is aiming to raise at least 9.8 billion euros ($12.4 billion) as it seeks a takeover of Germany's Postbank.
Ackermann said the capital increase would strengthen the bank's position
The bank, which is looking to reduce its reliance on investment banking, will create more than 300 million new shares based on its own assets to generate the finance needed.
Shareholders will be offered an initial special price of 31.8 euros per share, the bank said in a statement on Sunday.
"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.
"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, saying that the present focus was on investment banking.
Shares fall over planned move
Deutsche Bank shares closed at 47.70 euros on Friday, having fallen by around 5 percent when news of the planned capital increase leaked out.
Postbank has Germany's largest retail banking network
The equity generated would be used to consolidate an existing stake in Postbank, Deutsche Bank. However, it added that the money would "also support the existing capital base to accommodate regulatory changes and business growth."
Banks are eager to obtain new capital and revenue streams after global regulators meeting in Switzerland on Sunday agreed on new rules for banks.
The Basel III regulations mean that the cushion of solid "rainy day" assets, as a percentage of the amount that banks can lend will be raised from 2 to 7 percent.
Deutsche Bank currently owns almost one third of the equity in Postbank, which has Germany's largest retail banking network. Postbank will also need fresh capital to meet so-called Basel III regulations.
Author: Richard Connor (AFP/Reuters/AP)
Editor: Rob Turner