Deutsche Bank kicks off capital hike with steady 2017 forecast


Reuters

UPDATE 1-Deutsche Bank kicks off capital hike with steady 2017 forecast


(Adds details on compensation from annual report)
    By Arno SchuetzeFRANKFURT, March 20 (Reuters) - Deutsche Bank <DBKGn.DE>,
which is seeking to raise 8 billion euro ($8.6 billion) from
shareholders, predicted on Monday that group revenues would be
steady in 2017 as it reported a strong start to the year in bond
trading.
    However, shares in Germany's largest bank fell by more than
3.2 percent to 17.29 euros after it gave details of its capital
increase on Sunday and followed up with its annual report
showing that while it has brought down compensation levels,
staff numbers have fallen little since 2010.
    Shareholders have been frustrated by the pace of cost
reductions at Deutsche Bank, which said in the report that the
number of staff to earn more than a million euros dropped by
more than half to 316 in 2016, a turbulent year during which it
had to counter speculation it would need a state bailout.
    And just four Deutsche Bank employees received more than 4
million euros, after the bank sought to cut costs following
heavy losses and multi-billion dollar legal penalties last year.
    However, Deutsche Bank chief executive John Cryan said the
future looked brighter, with economic recovery in Europe and
higher interest rates on the horizon.
    "We currently see a better outlook for revenues," Deutsche's
chief executive, John Cryan, said in the report, summing up a
year he described as "very challenging".
    With the global economy on a steadier footing, the U.S.
Federal Reserve raising interest rates and political rhetoric
pointing to a pause on new regulation, growth beckons for the
world's top banks which are expected to make more profit from
bond trading this year, with U.S. lenders remaining strong and
typically weaker European lenders catching up.
    Deutsche Bank has so far lagged rivals, although it said
bond trading had enjoyed a good start to 2017.

    COST FRUSTRATION
    Investors in Deutsche Bank have long expressed frustration
with it for being slow in getting to grips with costs, most of
which relate to pay. The annual report showed the lender's total
headcount fell by 1.3 to 99,700 year-on-year in 2016.
    And total compensation for employees fell by 11 percent to
11.9 billion euros in 2016, when it had a net loss of 1.4
billion euros. This compared to 2014 when Deutsche Bank posted
net income of 1.7 billion and compensation fell by 5 percent.
    The annual report revealed that Cryan, who took home a total
of 3.8 million euros last year, will receive a salary of 3.4
million euros in 2017, while other board members will get
between 2.4 million and 3 million euros.
    The maximum pay for an executive board member in 2017,
including bonus, is 9.85 million euros.
    Most staff faced bonus cuts while fixed salaries edged up,
in line with rules imposed by European regulators following the
financial crisis in an effort to reduce excessive risk-taking.

    Deutsche Bank on Sunday gave details of its latest capital
raising, which involves it selling new shares at a discount of
26 percent to the price of the stock when excluding subscription
rights. This compares with a 38 percent discount for a similar
capital raising by Italy'sUniCredit <CRDI.MI> last month.
    The subscription price for new Deutsche Bank shares has been
set at 11.65 euros per share and the subscription period will
run from March 21 until April 6. [nL5N1GW0IX]
    The rights issue represents a hike of about 50 percent to
Deutsche Bank's current shares in issue and puts the bank on
course to have raised about 30 billion in the last seven years,
more than its entire current 25 billion euro market value.

 (Editing by John O'Donnell and Alexander Smith)
 ((arno.schuetze@thomsonreuters.com; +49.69.7565.1197; Reuters
Messaging: arno.schuetze.reuters.com@reuters.net))

Keywords: DEUTSCHE BANK OUTLOOK/ (UPDATE 1)



This article appears in: Stocks , Economy , Stocks , Technology , World Markets , Stocks
Referenced Symbols: CRDI , DBKGN


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