Ackermann's cash call

9 September 2010 By Hugo Dixon Follow @hugodixon

The official reason for the planned 89 billion euro rights issue will be to complete the acquisition of Postbank. But this also provides cover for jumping to the front of the queue of German banks that will need to top up their capital as a result of upcoming tighter regulation.

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Deutsche Bank is planning a 89 billion euro ($1011 billion) rights issue early next week, according to a person familiar with the situation.

The proceeds of the rights issue will be used mainly to complete the acquisition of Postbank, the German retail banking group previously majorityowned by Deutsche Post DHL.

In September 2008, Deutsche agreed a complex staged deal to buy Deutsche Post's 62 percent stake in Postbank. The agreement, revised in January 2009, specified that Deutsche would:

Acquire a 22.9 percent stake in Postbank by issuing Deutsche Post with 1.1 billion euros of Deutsche shares.
Underwrite mandatory exchangeable bonds issued by Deutsche Post. These would be exchangeable into a 27.4 percent stake in Postbank after three years. The value of the bonds was put at 2.7 billion euros.
Agree put and call options with Deutsche Post over its remaining 12.1 percent Postbank stake, exercisable between three and four years after closing. Deutsche paid Deutsche Post 1.1 billion euros in cash collateral at the time of closing.

Reuters: Deutsche Bank eyes up to 9 bln euro cap hikesources

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Acquire a 22.9 percent stake in Postbank by issuing Deutsche Post with 1.1 billion euros of Deutsche shares.

Underwrite mandatory exchangeable bonds issued by Deutsche Post. These would be exchangeable into a 27.4 percent stake in Postbank after three years. The value of the bonds was put at 2.7 billion euros.

Agree put and call options with Deutsche Post over its remaining 12.1 percent Postbank stake, exercisable between three and four years after closing. Deutsche paid Deutsche Post 1.1 billion euros in cash collateral at the time of closing.

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