Shares in Deutsche Bank are rocketing after a German publication Manager Magazin reported that a raft of investors from the Middle East and China could be injecting the embattled lender with much-needed cash.
The Deutsche Bank stock price initially rose by 4% at 12:55 p.m. BST (7:55 ET) and while the surge has cooled off a little, shares are still trading up by 2%, as of 13:25 p.m. BST (7:55 p.m. BST):
The German bank is facing several issues of concern to investors.
Deutsche Bank has had to adjust its business model to cope with stagnating growth in Europe and the low interest rate environment, leading to a period of restructuring.
Meanwhile, US authorities were reported to be demanding a fine of up to $14 billion (£11 billion) for mis-selling mortgage-backed securities before the 2008 financial crisis. The bank’s share price has slumped by more than 20% in recent weeks, dropping to a more than 30-year low.
Deutsche Bank CEO John Cryan was forced to tell the market that the bank would not settle at that level and expected the eventual fine to be much lower. Cryan also said the bank had no plans to raise capital.
However, the Manager Magazin report has provided a lot of hope for investors in the Deutsche Bank stock:
1. The sovereign wealth funds from Qatar and Abu Dhabi as well as Chinese investors are allegedly willing to raise their stake in the German lender to 25%.
2. The investors want a change in management, which threatens CEO John Cryan’s position.