Deutsche Bank plans a significant capital hike alongside the flotation of its asset management holding and further restructuring from asset disposals, Germany's biggest lender said on Sunday.
The €8 billion ($8.5 billion) capital raise will be launched on March 21, the bank said in a statement, and undertaken via the issuance of new shares with subscription rights for existing investors.
Meanwhile, the embattled firm estimates an additional €2 billion ($2.1 billion) could be raised through the disposal of non-core assets and the partial flotation of its minority stake in Deutsche Asset Management.
This follows a torrid 18 month period for the German bank, during which it has faced a litany of litigation battles with U.S. and European authorities, thousands of layoffs, deep cuts to its compensation pool and several management reshuffles.
"Our decisions are a significant step forward on the path to creating a simpler, stronger and growing bank. The capital increase will reinforce our financial strength substantially," John Cryan, Chief Executive Officer (CEO) of Deutsche Bank since June 2015, said in the press release.
There has also been pain for its shareholders in the form of dividend suspensions and a
After unveiling plans to restructure the business into four units to much fanfare only a year and a half ago, the group's strategy has pivoted once again to further simplify the business model into three divisions.
The new structure will consist of a Private & Commercial Bank, Deutsche Asset Management and a combined Corporate & Investment Bank.
The company also revealed ambitions to further integrate technology and other overhead functions in a bid to increase accountability, generate synergies and cut costs. The lender is targeting a drop in its adjusted cost base from €24.1 billion last year to around €21 billion by 2021.
The new three-pillar structure of our operating business should position us for significant growth, both in revenues and earnings," Cryan said.
This message represents a shift in tone from an interview with CNBC in Davos seven weeks earlier, during which the CEO said that hiking capital was not the bank's ideal path forward.
"We have always said that our strong preference was not to raise fresh capital when there were lots of other things we planned to do anyway" Cryan told CNBC at the World Economic Focus on January 18. Cryan was asked if Deutsche Bank would need to raise capital over the next one to three years.
Management changes are also featured in the wide-ranging announcement. The bank's Chief Financial Officer, Marcus Schenck and its CEO of Germany and Head of Private Wealth & Commercial Clients, Christian Sewing are assuming joint Deputy CEO positions, effective immediately.
Cryan is set to assume the additional role of responsibility for the bank's U.S. business, as Jeffrey Urwin retires after a transition period.