Friday, March 3, 2017

DB -- looking to raise new capital (Revisited)

The German banks had a terrible 2016 and 2017 is not shaping up to be any better.

  • For some reason after 2008 the ECB didn't encourage European banks to increase their capital
  • Equally, the ECB went out of its way in 2010/15 to buy distressed Greek debt at par (mostly from European banks, and insurance companies) a nice little 
  • German Banks did a headcount cut of 20% (both DB and Comerzbank) also in 2016
  • DB's share price between 2008 (April) and today has gone from $121 all the way down to $21
  • Just last week DB cut its bonus pool by 80% -- great for staff retention!

So early this morning rumors began circulating that DB was going to either issue new shares -- at the current price rather high dilution, OR IPO DB's Asset management business!  No wonder the stock tanked this morning.  DB Asset Management is the single most valuable asset of the company.  It has been completely free of any scandals, it is very well run and a profitable business for the group.  If this is true, it is an indication how serious things are at DB.

This is an indication of how serious things are at DB.  Although I think that DB's Asset management group is a very valuable business, you can only sell it once.

NEW:  Ok it looks like it will be new capital, and no IPO for DBAM -- share price took a dive yesterday because the market decided that Euro 8.5 billion is not enough, it should be Euro 12 billion (based on what?)  FYI today's DB's market cap is Euro 25 billion (which is not a lot), since June 2008 the bank has raised Euro 30 billion...


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