UPDATE: Deutsche Bank AG Raises Capital, Reaffirms Strategy; Place 60M Shares at €29.20/Share with Qatar's Paramount Holdings Services

Deutsche Bank

today announced a capital increase with proceeds expected to be approximately €8 billion. The capital increase will include an ex-rights issue of EUR 1.75 billion which has already been placed with an anchor investor and a fully underwritten rights issue. The rights issue is expected to raise €6.3 billon of new equity. Additionally, Deutsche Bank today reaffirmed its commitment to Strategy 2015+ and is providing updated financial aspirations and further details of an accelerated growth strategy. Strengthening capital The capital measures will increase the Common Equity Tier 1 (CET1) ratio by approximately 230 basis points from 9.5% at the end of the first quarter 2014 to 11.8% on a pro forma CRD4 fully-loaded basis. This increase follows significant strengthening of this ratio, which stood below 6% in mid 2012, under Strategy 2015+. These measures will substantially increase the Bank's capital ratio, provide a buffer for future regulatory requirements, and support targeted business growth. Deutsche Bank placed approximately 60 million shares at a price of €29.20 per share with Paramount Holdings Services Ltd., an investment vehicle owned and controlled by His Excellency Sheikh Hamad Bin Jassim Bin Jabor Al-Thani of Qatar, who intends to remain an anchor investor in Deutsche Bank. Additionally, through the rights issue, Deutsche Bank expects to issue up to 300 million new shares. The rights offering will be led by Deutsche Bank as global coordinator and bookrunner. A syndicate of banks have agreed to a firm underwriting of the new shares. Subject to the approval by the BaFin, a securities prospectus is expected to be published on 5 June 2014. The subscription period is expected to run through 24 June 2014. Strategy 2015+ updated targets The Bank reaffirmed its commitment to implementing Strategy 2015+, which has so far generated more than 350 basis points of CET1 capital ratio increase on a pro forma CRD4 fully-loaded basis, some €360 billion of CRD4 exposure reductions, and €2.3 billion of cumulative cost savings from the Bank's Operational Excellence Programme (OpEx) in less than two years. The package of measures announced today reinforces Strategy 2015+ by enabling Deutsche Bank to address challenging operating conditions. These include tighter regulatory requirements, the increased cost of compliance and litigation, and headwinds in the macro-economic environment. These measures also enable the Bank to invest in growth opportunities in its core businesses arising from improved dynamics in the competitive environment. As a result, the Bank is updating its targets as follows: * Accelerated delivery of target CET1 ratio, to exceed 10% on a pro forma CRD4 fully loaded basis * Introduction of a leverage ratio target of approximately 3.5% by end of 2015 on a pro forma CDR4 fully-loaded basis * Reaffirmation of the cumulative OpEx savings target of €4.5 billion by end of 2015 * Updated Group post-tax return on equity (RoE) targets: o approximately 12% in 2015 adjusted for significant non-operating items o approximately 12% in 2016 on a reported basis * Updated Cost Income Ratio targets: o approximately 65% in 2015 adjusted for significant non-operating items o approximately 65% in 2016 on a reported basis * Deutsche Bank aspires to return surplus capital to shareholders - including in the form of competitive dividend payout ratios - in the long-term. Core business targets for 2015 have been updated as follows: * Corporate Banking & Securities (CB&S): adjusted post-tax RoE of 13%-15% * Private & Business Clients (PBC): reported income before income taxes (IBIT) of EUR 2.5-3.0 billion * Global Transaction Banking (GTB): reported IBIT of €1.6-1.8 billion * Deutsche Asset & Wealth Management (DeAWM): reported IBIT of approximately €1.7 billion, unchanged from the previous target