(Corrects dateline to June 3)
By Arno Schuetze and Kathrin Jones
FRANKFURT, June 3 Deutsche Bank will
price an 8 billion euro ($11 billion) capital increase on
Wednesday, likely at a big discount, to fortify its balance
sheet ahead of regulatory checks and to complete a costly
Germany's largest bank has spent the past two weeks
marketing the rights issue to its shareholders with promises of
both cost cuts and future growth.
Investors have broadly welcomed the issue, saying it will
put concerns about capital weakness to rest for at least a year
as co-Chief Executives Anshu Jain and Juergen Fitschen complete
a turnaround plan.
"There is relief that they've finally got on and done it,"
said David Moss, head of European equities at London-based fund
manager F&C Asset Management which holds a small stake
in the bank. "The amount they're raising looks significant
enough to get them to a level which looks satisfactory."
Market participants contacted by Reuters pointed to a likely
price range between 21 euros and 21.50 euros, which the bank is
expected to set late on Wednesday.
A price of 21 euros would be close to the lowest possible
level for Deutsche to fulfil its goals and close to the price
indicated when it announced the deal. Deutsche plans to tap
shareholders for 6.3 billion euros and place another 1.75
billion euros in shares with a member of the Qatari royal
That price would also represent a hefty discount of about 32
percent to the bank's closing share price preceding the news, or
about 27 percent to the theoretical share price accounting for
dilution, according to Reuters calculations.
Deutsche sees itself as Europe's last man standing in the
investment banking sphere after a pull-back by Barclays
, UBS and others left a gap that it aims to
fill as a top debt trader.
It wants to fortify its position in North America and Asia
in wealth management and investment banking while modernizing
its domestic retail franchise in Germany.
But at least half of the new money will go to filling new
capital demands triggered by regulatory reforms, bank officials
have told investors.
In less than a year, banks participating in the balance
sheet review led by the European Central Bank have raised more
than 104 billion euros by raising new cash, withholding
provisions and other measures, ECB officials have said.
Deutsche shares have fallen some 15 percent since the start
of the year compared with a 4 percent rise on average by rivals
, partly due to expectations of a dilutive capital hike.
Once the price is set on Wednesday, the subscription rights
will be allowed to trade on the Frankfurt bourse. Current
shareholders can sell their rights at that time or sign up to
purchase new shares. The offer is expected to close on June 24.
Deutsche Bank declined to comment.
(Additional Reporting by Jemima Kelly in London; Writing by
Thomas Atkins; Editing by Erica Billingham)