* Capital increase is bank's fourth since 2010
* Backed by top shareholders -source
* Deutsche targets prudent growth, hopes pinned on U.S.
* Deutsche shares down 1.8 percent
(Releads, adds CEO comments)
By Arno Schuetze
FRANKFURT, April 7 Deutsche Bank's
chief executive said an era of cutbacks was over on Friday after
completing an 8 billion euro ($8.5 billion) capital increase to
pay legal penalties, keep regulators happy and make fresh
"It is clear that we will not succeed by shrinking further,"
John Cryan said in a letter to staff after Deutsche Bank's
latest capital hike, which took its total capital raised over
seven years to 30 billion euros, just below its market value.
Cryan's cash call was backed by top shareholders - a group
of Qatari investors, U.S. fund Blackrock and China's HNA
Group - whose stakes and influence over Germany's biggest bank
would otherwise have been diluted, one source said.
"Our capital increase should eliminate any remaining doubt
about Deutsche Bank's stability. This is why it's even more
important to focus on a topic that has been in the background
for quite some time: growth," the British CEO said.
Deutsche Bank shares were down 1.8 percent at the bottom of
a flat German blue-chip index by 1452 GMT.
Deutsche Bank's fourth capital hike since 2010, previously
described by Cryan as a last resort, involved about 80 percent
of shareholders buying new shares, while the rest sold their
rights, sources told Reuters.
Cryan, who has pledged to reward shareholders' trust by
seeing through a turnaround of Deutsche, acknowledged that
recent feedback showed that while many investors and analysts in
Europe were still sceptical about Germany's biggest lender, U.S.
investors were more positive.
"They have seen first-hand how well banks are recovering in
their home market and how profitable they can be. They expect us
to turn the corner too," he said
The high-margin U.S. market, which accounts for half of
Deutsche Bank's global investment banking revenues, will play an
important role, he added, vowing to steer clear of business that
could comes back to haunt it later in litigation costs.
Deutsche Bank transformed itself into a major player on Wall
Street over the past two decades, but extravagant bets and poor
conduct has resulted in a litigation bill of 15 billion euros
Until now, Cryan has focused on damage limitation and
cost-cutting since taking over first as co-CEO in 2015 and then
becoming sole CEO last year.
The next big step in Deutsche's reorganisation, announced
last month, is a plan to list a minority stake of its asset
management business, which includes its mainstay DWS retail
asset management brand.
While a listing is no longer needed to get capital in line
with regulatory demands - its capital ratio will now rise to
14.1 percent compared with the ECB's minimum requirement of 9.5
percent - it could help lift Deutsche's valuation.
European banks on average trade just below their book value
and Deutsche trades at half of its book value, while listed
asset managers such as Schroders, Henderson and
Aberdeen trade at more than twice book value.
Although Deutsche Bank has vowed to carry out the initial
public offering within two years, people close to the matter say
that the listing, which could value the asset management
business at up to 8 billion euros, may be launched this autumn.
It will only pull off the expected listing of 10-20 percent
of the asset management business if equity markets are buoyant
and it is able to fetch an attractive price, the sources said.
A listing would also give the asset management division a
paper currency for potential acquisitions and shares which could
be used to incentivise management.
($1 = 0.9414 euros)
(Editing by Georgina Prodhan and Alexander Smith)