A Deutsche Bank plan to raise nearly $11 billion in new capital drew criticism on Wall Street, bedeviling the German bank's shares in the U.S. and Europe and prompting at least one prominent analyst to downgrade the stock.
Deutsche, whose capital-raising plans emerged on Sunday, announced that it would issue hundreds of millions of new shares in a so-called "rights offering" to existing shareholders and sell a smaller swath of shares to the royal family of Qatar. The new money will improve Deutsche's regulatory capital ratios, the bank said, and will be used, among other things, to make new hires in the U.S. wealth-management business and to help digitize its operations in Europe.
In a conference call Monday morning, Deutsche co-chief executive Anshu Jain reaffirmed his bank's commitment to the fixed-income business, which was a revenue disappointment for many banks this past quarter, but added that the market could remain under pressure.
Jain's rhetoric and the bank's latest move are a departure from the current industry playbook, where some competitors are selling under-performing or non-core assets in their fixed-income divisions, such as commodities, and looking for new ways to work with their existing capital. But Deutsche's steps now raise questions about whether other banks will need to follow suit as they prepare for enhanced bank-capital requirements.