FRANKFURT May 22 Deutsche Bank will defend plans to raise 8 billion euros ($11 billion) in equity on Thursday when management stands before shareholders at an annual general meeting, less than a week after announcing the surprise plan.
Germany's largest bank launched the capital increase in a surprise move only weeks after first hinting that it was unable to retain enough profit to fortify its finances ahead of a regulatory health check slated for later this year.
Shareholder approval is not required but some investors will express anger with the issue and with the lack of progress on resolving a long list of investigations that has dogged the bank since the 2008-2009 financial crisis.
"With the capital hike, the bank builds an extra cushion so that it is better prepared for the ECB test," said Stefan Best, managing director at Standard & Poor's in Frankfurt.
Announcing the hike, Deutsche diluted and delayed its turnaround targets originally set for 2015, pleading for patience as the bank, like many of its rivals, struggles to restructure and restore profitability.
Management has pointed to "tectonic shifts" that have opened opportunities in investment banking. European rivals UBS and Barclays have withdrawn from areas such as bond trading where Deutsche believes it can succeed as a big European player on a stage dominated by U.S. rivals like Goldman Sachs and JPMorgan.
"Whether Deutsche Bank comes out of the financial crisis as a winner in investment banking remains to be seen," Best said.
Separately, management will ask shareholders to approve a proposal permitting senior staff to receive bonuses worth twice base pay.
European Union rules say that bankers' bonuses cannot exceed their annual fixed salary, or twice that if shareholders approve, to curb the sort of excessive risk-taking blamed for the financial crisis.
The bonus cap is one of the most high-profile rules approved by the 28-country bloc following public anger over high pay at banks, many of which were propped up by taxpayers in the crisis. (Reporting by Thomas Atkins; editing by Keiron Henderson)