Deutsche Bank Shares Surge After U.S.-Based Capital Group Builds Stake

Deutsche Bank shares surged to a 15-month high after U.S.-based investor capital group built a 3.1% stake in the troubled European lender.
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Deutsche Bank (DB) - Get Report shares rose the most in nearly four years Thursday after it said a U.S-based Capital Group, and investment fund with nearly $2 trillion in assets, had built a stake in Germany's biggest lender.

Los Angeles based Capital Group now owns around 3.1% of Deutsche Bank, the lender confirmed in media statements Thursday, just a week after it posted a larger-than-expected 2019 loss of €5.7 billion, extending its run of annual red to five consecutive years. The Capital Group stake sits just below that of Hudson Executive Capital, at 3.14%, although both trail the 6.1% owned by the royal family of Qatar and the 4.5% owned by global investor BlackRock Inc. (BLK) - Get Report.

Deutsche Bank shares were marked 13.3% higher in late afternoon trading in Frankfurt following news of the Capital Group investment, and changing hands at a 15-month high of €9.36 each.

Deutche Bank shares have risen more than 40% since early December, when the European Central Bank had relaxed some of its capital requirement rules in a rare boost to CEO Christian Sewing's stalled turnaround plans.

The ECB, which supervises the region's banks, trimmed Deutsche Bank's so-called Tier 1 capital requirement by 25 basis points, to 11.59%, a move that allowed more freedom to pursue shareholder-friendly initiatives without the need to raise more equity.

Deutsche Bank said last year that it expects to cut around 18,000 jobs, some 20% of its global total, and create a so-called "bad bank" for around €74 billion in under-performing assets as part of the restructuring.

The overhaul, which will cost the bank €3 billion in second quarter charges, will also mean lead to a €2.8 billion loss over the three months ending in June, a suspension of the bank's regular dividend and a 40% reduction in the overall asset base of the business units targeted for change.

Sewing called the moves "the most fundamental transformation of Deutsche Bank in decades" and said it was a "restart" that would "benefit of our clients, employees, investors and society."