Deutsche Bank to restructure, raise $8.5B in capital

Deutsche Bank will issue new shares to raise at least $8.5 billion and undergo restructuring in moves to turnaround the German banking giant.

The Frankfurt-headquartered bank will issue 687.5 million new shares later this month and sell a minority stake in its its asset management business, Deutsche Bank CEO John Cryan said Sunday in a note to employees. "A strong capital base is essential if we’re to succeed in charting this strategy," Cryan said.

Other restructuring moves: Deutsche Bank will combine its Postbank unit, which offers banking in post offices, into its Private & Commercial Bank. Deutsche Bank had been looking for a buyer for Postbank. A merger of the bank's global market division and corporate and investment banking division will create a single Corporate & Investment Bank, Cryan said.

“Our decisions are a significant step forward on the path to creating a simpler, stronger and growing bank," he said in a statement. "The capital increase will reinforce our financial strength substantially."

The moves "should position us for significant growth, both in revenues and earnings," he said.

Among Europe's largest financial firms, Deutsche Bank has posted annual losses for the last two years -- about $1.5 billion last year and $7.2 in 2015 -- and been hit with massive fines from the 2008 global financial crisis. Earlier this year, Deutsche Bank reached a $7.2 billion settlement with U.S. officials for misleading investors about mortgage securities it marketed and sold before the meltdown.

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Follow Paste BN reporter Mike Snider on Twitter: @MikeSnider.