Deutsche Bank AG (USA) (NYSE: DB) surged over 1.7% this morning as its New York branch raised their prime lending rate to 4.00% from 3.75% effective tomorrow, March 16, 2017 along with their Deutsche Bank Trust Company Americas (DBTCA) partner.
Meanwhile, the bank is also considering to boost its capital position by selling its Indian retail businesses. As of March 31, 2016, DB Indian business recorded $10.5 billion in assets with a profit of 23.4 billion rupees. Deutsche Bank has previously sold parts of its India business. In 2010, it sold the mortgage business acquired as part of its takeover of German retail bank Postbank, and in 2015 it sold its local asset management unit.
Moreover, Deutsche Bank is also considering to sell its retail operations in European countries including Spain. In early March, DB planned a $8.5 billion capital increase and a stock market listing of the company’s asset management business which will raise $2.13 billion in capital. This will reload the lender’s capital reserves and also release funds for potential investments in its core business of investment banking, which has currently lost market share to Wall Street rivals. While asset disposals are part of the strategy, Cryan stressed that they’ll play a minor role in the overall aim of boosting capital levels.
Since Financial crisis, the bank has been raising capital in huge amounts totalling to approximately $28.5 billion till now (including the recent). On this note, here is a market rumour that Deutsche would no longer offer all services to all markets in the United States but only niche products which consumes a lot of capital. The current capital raising is intended to boost the retail business in Germany and thus older plans of the bank to sell Postbank were scrapped. On the other hand, DB is now exposed to high competition with state-owned cooperative banks.
In a separate development, in order to restructure its Wall Street business Deutsche replaced its U.S. chief Bill Woodley with the global head of its stock-trading business, Thomas Patrick.
Additionally, Wells Fargo & Co, Royal Bank of Scotland Group Plc and Deutsche Bank AG have reached a $165 million class-action settlement over their underwriting for the now-bankrupt subprime lender NovaStar Mortgage Inc.