http://mobile.reuters.com/article/idUSBREA4H07720140518?irpc=932
When $11B in equity capital is raised when everything is seemingly normal, I get worried that there is undisclosed bad news waiting to be released. Yet, the share price of DB barely moved yesterday. The feel good corporate press release does little to assuage my doubts. What do you guys think?
They say the best time to raise capital is when you don't need it
Yea, I think it's just a "to be safe" type of measure. They were focused on reducing balance sheet usage over the past year or two to raise capital ratios and this just helps their cause. They know the regulatory environment is about to get kicked up a notch with Bafin waking up so they might as well prepare for the worst.
Could there actually be some kind of Lehman-type manipulation going on with them holding random illiquid crap? Sure, and this cushion would help when things eventually get bad again, but I think it's more of the first reason I laid out.
The stranger part, that worries me, is the deeply discounted rights issue they are offering. I guess if you suck at generating returns for your shareholder, that route is as good as any. But really, DB seems to be stuck in purgatory with legacy balance sheet issues, compounding sovereign debt holdings of crappy countries and an inability to manage themselves accordingly to generate any returns or pull themselves out of this mess. Add in more stringent capital requirements, and you have an issue.
Still, I agree it is a very odd situation.
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