Deutsche Bank Chief Executive John Cryan has declined to rule out the possibility of a capital hike in the coming years, with a range of regulatory uncertainties still weighing on the German bank.
In an exclusive interview at the World Economic Forum in Davos, and his first ever since becoming chief executive of Deutsche Bank, Cryan told CNBC that the bank has always said its preference was not to raise fresh capital when there were other options available, but detailed a range of issues still to be resolved.
"I have been in a CFO role before, so I know never to say 'never.' It remains to be seen what those [regulatory] uncertainties hold for us," he said Wednesday when asked about the possibility of a capital increase in the next one to three years.
"Once we have assessed — particularly our capital position from a regulatory perspective — once we have assessed that, we will always consider how we best manage the company's resources," he added.
Cryan spoke of the bank reducing risk and disposing of "a lot of businesses in the last 12 to 18 months." He said the bank had yet to have clarity on new prudential regulation rules, adding that there was still "critical uncertainty" on the Basel regulations for the banking industry. He posited that there was still "some uncertainty" on the bank's legacy positions too.
Shares of Deutsche Bank experienced a wild ride in the middle of 2016 after the proposed $14 billion settlement with the U.S. Department of Justice that related to the selling of residential mortgage-backed securities (RMBS).
This raised concerns on its capital position, but the German banking giant insisted that it had a "comfortable" cushion at the time. This didn't stop a whole bunch of price fluctuations in the company's bonds and the cost of insuring its debt. There were reports of a potential state bailout at the time, but Cryan told CNBC Wednesday that he, or any member of the board, never discussed the idea with the German government.
The German lender came under pressure from aggressive short-selling, notably from some large hedge funds. The bank announced further job cuts in Germany during that period and it announced it was offloading its British insurance business. Initial worries about Deutsche Bank actually surfaced earlier that year, with investors detailing concerns over its exposure to the energy sector and a possible cash crunch.
On Tuesday, the official announcement came that it would pay $7.2 billion for misleading investors. The U.S. Justice Department stated that this "agreement represents the single largest RMBS resolution for the conduct of a single entity."
"This resolution holds Deutsche Bank accountable for its illegal conduct and irresponsible lending practices, which caused serious and lasting damage to investors and the American public," said Attorney General Loretta E. Lynch in the release.
"Deutsche Bank did not merely mislead investors: It contributed directly to an international financial crisis."