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
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and Barclays have withdrawn from areas such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
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)