Deutsche Bank capital hike priced at 24% discount
Deutsche Bank priced its 8.5 billion euro ($11.6 billion) capital hike at 22.50 euros per share on Thursday, higher than forecast.
Sources with knowledge of the matter had told CNBC on Wednesday that the 299.8 million in new shares would price at between 21 euros and 21.50 euros.
The price still represented a 24 percent discount on the German banking giant's share price. Its stock was roughly flat at 29.81 euros after the pricing details of the issue were announced.
However, shares then declined to close down almost 3 percent, at 28.90 euros.
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The new shares will be available in Germany, the U.K. and the U.S. from Friday. Deutsche Bank shareholders may acquire five new shares for every 18 existing shares during the subscription period, which is expected to run from June 6 and June 24.
Gross proceeds from the issue will amount to 6.75 billion euros, with a further 1.75 billion euros to come from shares placed with Paramount Holdings Services, an investment vehicle owned and controlled by Sheikh Hamad Bin Jassim Bin Jabor Al-Thani, a member of the Qatari royal family. Al-Thani purchased 60 million shares at 29.20 euros.
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The hike is aimed at improving Deutsche's capital ratio, providing a buffer for future regulatory requirements and supporting business growth. It should increase the bank's common equity tier 1 ratio, a key measure of a bank's ability to withstand an economic shock, to 11.8 percent, up from 9.5 percent at the end of March this year.
"We have taken decisive steps to protect Deutsche Bank against known capital challenges, sharpen our competitive edge, and accelerate investments in growth in all our business divisions," said Jürgen Fitschen and Anshu Jain, co-chief executive officers at Deutsche, in a news release on Thursday.
The new shares are expected to be listed on the German stock exchange and the New York Stock Exchange from June 25.