Deutsche Bank considers 5 billion euro capital increase - paper
FRANKFURT (Reuters) - Deutsche Bank is considering a capital increase of up to 5 billion euros (4.1 billion pounds) this year to cope with European stress tests and new capital rules, a German newspaper reported, sending its shares down more than 2 percent.
Handelsblatt newspaper on Friday cited sources at the bank as saying that no decision has been made but that Deutsche Bank's co-chief executives, Juergen Fitschen and Anshu Jain, were thinking of a "Plan B" to give an extra fillip to its efforts to close the gap with international rivals in terms of capital strength.
Germany's biggest lender, which is due to release first-quarter earnings results on Tuesday, declined to comment on the report.
Jain told Reuters earlier this year that Deutsche Bank had not discussed raising equity capital, though it was going ahead with plans to bolster other forms of regulatory capital.
Deutsche Bank has come under continued criticism from analysts and investors, however, for keeping too thin a capital safety cushion relative to its large investment banking business, as regulators tighten capital rules in the wake of the financial crisis.
Deutsche Bank managed to boost its core tier one ratio - a closely watched measure of balance sheet strength - to 9.7 percent at the end of 2013, but it still faces litigation costs around the world linked to the financial crisis and new capital rules that will put pressure on the ratio as they come into force.
Some said an equity capital increase would put an end the uncertainty over such a move, which has dragged on the share.
"We would welcome a capital increase with a volume of at least 5 billion euros as it would end concerns about Deutsche Bank's capital level and would put the bank in a position to win market share again instead of shrinking its balance sheet to improve capital ratios," Equinet Bank analyst Philipp Haessler said in a note to clients.
Deutsche Bank's share was the biggest decliner in the German DAX blue chip index <.GDAXI>, down 2.2 percent to 31.26 euros by 0942 GMT, lagging 0.9 percent declines in the DAX and the STOXX Europe 600 banking index <.SX7P>.
Last year, the bank raised 2.96 billion euros by selling 90 million shares.
(Reporting by Christoph Steitz, Alexander Huebner and Jonathan Gould; Editing by Stephen Coates and Jane Baird)
