Shares of Deutsche Bank and Commerzbank slipped after a report in the Financial Times stated that the former is in talks to raise as much as 10 billion euros ($11.2 billion) in fresh equity to support their potential merger.
The report published Thursday, citing people familiar with the talks, said executives from Deutsche Bank have been looking at a plan to raise equity of between 3 billion euros and 10 billion euros.
Shares of Deutsche Bank slipped nearly 4 percent, while Commerzbank slipped more than 2 percent. According to the FT, the capital increase is expected to equal 40 percent of the two German lenders’ combined market capitalization.
“It is much too early at this stage of the due diligence process to make a credible assessment if there is any potential capital need at all.”, a spokesperson from Deutsche Bank told CNBC Thursday.
Back in 2007, Deutsche Bank had its own balance sheet of 2 trillion euros ($2.25 trillion) and a market capitalization of nearly 50 billion euros, compared to Commerzbank’s relatively humble total assets of 270 billion euros and a market cap of 17 billion euros. Over the last 10 years that gap has narrowed.
Deutsche Bank has lost 600 billion euros of its assets and is down more than 60 percent in terms of market capitalization. Commerzbank on the other hand has gained around 100 billion euros or so in its total assets but lost half its market cap.
A merger would give Deutsche Bank and Commerzbank access to nearly 1.9 trillion euros of total assets.
Shares of Deutsche Bank and Commerzbank are both down more than 35 percent over a 12-month period.
Story cited here.