DEUTSCHE Bank shares have dived by six per cent after it announced a shock share sale aimed at raising €8billion (£6.9bn) of cash in a desperate bid to shore up the German giant.
The chief executive John Cryan previously said such a move would be a last resort for the bank.
Now Germany’s largest lender wants to raise the extra capital amid reports of more legal issues, which could lead to more big fines for the troubled firm.
It is the fourth time the bank has had to turn to investors for extra cash since 2010 and suggests Mr Cryan’s previous plans to save the bank have failed.
Since taking the lead at the bank almost two years ago, the boss has tried to slash costs for the bank by cutting thousands of jobs as well as bonuses for its workers, on top of selling off parts of the business.
Mr Cryan said: “On strategy, it’s obvious we had a change of heart.”
Stefan de Schutter, a trader at Frankfurt-based Alpha, said: “The question is whether this will be the last capital hike or whether the bank will need more yet again in a few years.”
“Until now, none of the restructuring measures have borne fruit.”
The bank has received €20bn in fresh capital over the past six years, yet its market value still only stands at just €26.4bn.
Deutsche last month posted a larger than expected net loss of €1.4bn (£1.2bn) for 2016, as it struggled to cope with costs of regulator fines, as well as low interest rates.
This year the bank has already settled a huge £5.2bn ($7.2bn) penalty relating to the 2008 financial crisis, as well as a £504million charge over a Russian money laundering plan.
Now the lender reportedly faces further hits over previous actions in the forex market.
Connor Campbell, financial analyst at Spreadex.com, said: “The reason behind the bank’s drop is two-fold.”
“Firstly, the company is reportedly facing yet another legal challenge, this time over ‘last look’ trades related to the forex market.”
“Secondly, Deutsche Bank announced it was aiming to raise €8 billion through a huge share sale, the fourth time it has announced such a plan since 2010 and something that contradicts comments from chief executive John Cryan, who has previously stated the bank would not need to turn to the markets for another cash injection.”
Full article: Deutsche Bank MELTDOWN: Shares plunge as bank tries to raise £6.9BILLION in call for cash (Express)