World Economy

Options Limited for Deutsche

Options Limited for DeutscheOptions Limited for Deutsche

Deutsche Bank needs to move quickly to boost capital and deliver healthy profits if it is to restore investor confidence, but its room for maneuver appears limited, bankers, analysts and investors say.

When John Cryan took over as chief executive last year, he announced steps to cut staff and overheads and to sell off non-core businesses. But a $14 billion fine sought by the US Department of Justice for the bank's mis-selling of mortgage securities has exposed a potential capital shortfall of between €5 to 10 billion ($5.50-10.99), while progress in implementing Cryan's strategy has been slow, Reuters reported. The bank has no solvency or liquidity problems and it says it currently has no plans for a capital increase and that it is meeting all its regulatory requirements. But while the DOJ settlement might finally be significantly lower than $14 billion, the Frankfurt-based lender faces further fines for suspected money laundering that could hike litigation charges to between $8-$9.5 billion.

Some analysts say litigation reserves total just €5.5 billion ($6.16 billion). That means Germany's flagship lender may have no choice but to raise money, despite limited options in the short term. The easiest ways to raise cash are via a capital increase and accelerating a job cutting program. But analysts and investors say other options, such as asset sales, bonus forfeitures or even a full-blown merger with a rival should be considered.

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