"Deutsche Bank has finally admitted – to no-one’s
surprise – that it needs more capital. It has announced
plans to raise 8bn EUR of new
Core Tier 1 equity capital (CET1).
Although everyone knew Deutsche
Bank was short of capital, this admission is nevertheless somewhat embarrassing.
Only last year, Deutsche Bank raised 3bn
EUR with a rights issue and claimed that no further capital would be needed."
"To me, Deutsche Bank looks very much like the archetypal “too big to
fail” zombie bank – draining money from central banks, sovereigns and investors
while giving little in the way of returns. The question is for how long
investors will be willing to put up with poor returns and repeated demands for
more money – for if anyone thinks this is the last of Deutsche Bank’s capital
raising, I fear they are very much mistaken. Though admittedly it is far from
being the only European bank in this condition. European banks generally are in
poor shape. It is to be hoped that the ECB’s stress tests will encourage them
to put their houses in order."
