According to a Bloomberg report, embattled German banking giant Deutsche Bank AG (NYSE:DB) is in exploratory talks with securities firms regarding raising capital to pay multi-billion dollar fines, should the need occur.
This news comes in direct contrast to CEO John Cryan’s recent letter to employees claiming the company has strong liquidity reserves. Cryan has blamed speculators and the media for “causing unjustified concerns” about the bank’s health.
But now, reports Bloomberg, Deutsche is preparing to raise capital to stay afloat:
Senior advisers at top Wall Street firms are speaking to representatives of the lender about ideas including a share sale and asset disposals, said the people, who asked not to be identified because the plans are private. Deutsche Bank could also revisit selling its Deutsche Postbank unit or parts or all of its asset-management division, the people said. A spokeswoman for Frankfurt-based Deutsche Bank declined to comment.
Deutsche Bank is also considering other options, including a stock sale:
The banks are offering to help underwrite a stock sale to raise about 5 billion euros ($5.6 billion) should the bank need it, the people said. That is about the maximum amount in discounted shares Deutsche Bank can sell without needing shareholder approval, the people said. The firm could also go to shareholders to request approval for more funds.
So despite the company’s claims to the contrary, DB is almost certainly looking to boost its capital position as it prepares for a multi-billion dollar settlement with the U.S. Department of Justice.
Deutsche Bank shares fell $0.02 (-0.15%) to $13.51 in premarket trading Friday. Year-to-date, DB has plunged 43.98%.