"Capital" gains at Deutsche Bank

Courtesy: Deutsche Bank

After dodging inquisitive analysts for some time now, Deutsche Bank decided to go all out on the Tier 1 Capital adequacy milestones.

Core Basel III Tier 1 Capital Ratio of 8.8%  together with € 103 billion RWA mitigation had taken DB beyond it's self defined target of 8.5% at the end of Q1 2013. CEO Anshu Jain's carefully orchestrated deliberations that raising capital would be the last option,  not withstanding, the market greeted news of  DB raising €2.8 billion in equity capital with exuberance. DB stocks closed about 5% higher.

In addition there is the potential of raising another € 2 billion of subordinated capital over the next twelve months. That will take Deutsche Bank's Core Tier 1 to well over 9% making it the leader in the race to meet the Basel III requirement (6% Core Tier 1 by 2015 + 2.5% Capital conservation buffer by 2019 +0-2.5% counter-cyclical buffer)

It is a new world post financial crisis and post financial regulations. A well capitalized bank is less risky to investors and to the system at large. Dilution, what? And the € 2.4 billion earnings before Income Tax did not hurt.