NEW YORK (AP) " European banking giant Deutsche Bank announced plans to raise at least $8.5 billion in capital and sell off a stake in its asset management business, in a move to help shore up the troubled German firm.
Deutsche Bank will issue 687.5 million new shares later this month, the bank said Sunday, in an effort to take advantage of the recent run up in the bank's stock price.
As part of the restructuring, Deutsche said it will take a part of its asset management business public. The bank will also abandon its plans to sell Postbank, and will integrate Postbank into the rest of its retail banking business.
"Our decisions are a significant step forward on the path to creating a simpler, stronger and growing bank," Deutsche Bank CEO John Cryan said in a statement.
Deutsche Bank, one of the Europe's largest financial firms, has struggled to maintain profitability in the last two years. The bank has faced billions of dollars in fines for its role in the financial crisis from both U.S. and European authorities, low interest rates both in the U.S. and Europe, and a struggling European economy. The firm reported a $1.51 billion loss in 2016 and massive $7.38 billion loss for 2015.
Management has made several efforts to fortify the bank and its balance sheet, including cutting expenses and selling off parts of the business.
Up until recently, bank management had resisted selling new shares in the bank, making the argument that it would hurt existing shareholders. Instead, management have focused on trying to sell Postbank. But Deutsche Bank was not able to find buyers for the retail banking unit, leaving the bank with few options other than to raise fresh capital.
Deutsche Bank was one of the last major banks to settle with Justice Department over its role in the U.S. housing bubble and subsequent financial crisis. The bank agreed in December to pay $7.2 billion in fines and penalties, which was significantly less than the rumored $14 billion that U.S. authorities were pushing Deutsche to pay.
This story has been automatically published from the Associated Press wire which uses US spellings