Deutsche Bank reportedly to unveil €9-billion rights issue

Deutsche Bank is set to raise up to €9 billion through a rights issue to bolster its capital as global banking regulators finalise tough new rules for the industry, a report said Friday.

Deutsche Bank reportedly to unveil €9-billion rights issue
Photo: DPA

Germany’s biggest bank aims to announce the offering on Monday or Tuesday, in what will be the largest rights issue by a European bank this year, reported the Financial Times, citing people close to the plan.

The issue will raise between €8 billion and €9 billion (up to $11.4 billion, £7.4 billion). Deutsche Bank’s current market value is €30 billion, according to the FT.

The news came ahead of a meeting Sunday of global banking regulation chiefs in Basel, Switzerland, to approve new capital and liquidity measures drawn up by the Basel Committee on Banking Supervision, an international watchdog.

Banks will have several years to meet higher capital ratios, but big banks are likely to move fast to reassure markets, according to analysts cited by the paper.

Deutsche is likely to use some of the new funds to increase its stake in Postbank, the German post office bank, which will probably be its main explanation for raising fresh capital, according to the FT. But analysts believe the Postbank deal is a pretext.

The size of the offering suggests its real aim is to bolster capital at Deutsche itself and help the financial giant pull ahead of its weaker German rivals, said the paper.


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German watchdog steps up monitoring of popular N26 online bank

Germany's financial watchdog on Wednesday ordered online bank N26 to step up "internal controls and safeguards" to prevent money laundering and terrorist financing, and said it was appointing a special representative to monitor progress.

German watchdog steps up monitoring of popular N26 online bank
An N26 card. Photo: Wikimedia Commons

Bafin’s announcement marks an escalation of previous warnings to the popular Berlin start-up, which has come under fire in the past for not properly verifying the identities of new customers.

“Bafin ordered N26 Bank GmbH to rectify deficiencies both in IT monitoring and in customer due diligence,” the regulator said in a statement.

N26 “is required to ensure that it has the adequate personnel, technical and organisational resources to comply with its obligations under anti-money laundering law,” it said.

A “special commissioner” would oversee the company’s efforts, Bafin added. Founded in 2013 and known for its transparent debit cards, digital bank N26 is one of Germany’s most high-profile financial technology or “fintech” firms and now has seven million customers in 25 countries.

Its rapid growth has rested in part on fast-track identity procedures for new customers.

READ ALSO: What is the digital German bank N26 that’s about to hit a million users?

In 2019, German business weekly WirtschaftsWoche said it had managed to open accounts using forged IDs.

N26 on Wednesday pledged to “work closely” with Bafin and the special representative.

It said it had already significantly increased measures to prevent money laundering in recent years, “but we recognise that more must be done in this area”.

The coronavirus crisis had contributed to a spike in fraudulent online transactions worldwide, N26 added, “increasing the demands placed on banks in the fight against crime”.