Deutsche Bank soars as US closes currency probe
Shares in German lender Deutsche Bank leapt in Frankfurt trading Tuesday, as news US authorities had closed an investigation into past manipulation of currency markets lent investors confidence in the troubled institution. Gains for Deutsche shares topped 7.0 percent in the early afternoon, before slipping back to trade at 16.16 euros ($17.61) -- still up 5.33 percent -- just after 1400 GMT. Buyers' keenness on the Frankfurt bank was undimmed by the other big news of the day -- the start of a 8.0-billion-euro capital increase by Deutsche, which needs cash to fund a far-reaching restructuring and bolster its reserves. Normally, stock in a firm issuing hundreds of millions of new shares falls as fresh supply weighs on its price, but not this time. The lender said in its 2016 annual report published Monday that the US Department of Justice (DoJ) "has closed its criminal enquiry 'concerning possible violations of federal criminal law in connection with the foreign exchange markets'". Global banks have paid out billions in fines for colluding to manipulate foreign exchange markets in recent years, including a settlement of almost $6 billion by Barclays, JP Morgan Chase, Citicorp, UBS, Bank of America and the Royal Bank of Scotland in 2015. The DoJ's mothballing of its Deutsche probe comes after another US regulator, the Commodities Futures and Trading Commission, dropped its own investigation into the German bank's currency activities in October. But "other regulatory and law enforcement agency investigations... remain pending," the bank noted in its report. Deutsche is engaged in a long struggle to free itself from thousands of legal cases worldwide relating to its past conduct, and in December agreed a $7.2-billion deal with the DoJ relating to mortgage-backed securities trading in the run-up to the financial crisis. At the same time, the bank is attempting a massive restructuring that will see it shift focus from global financial markets to traditional banking for businesses and households in Germany. Chief executive John Cryan announced in early March that the lender would raise some 8.0 billion euros of fresh capital to fuel his planned reorganisation and boost the capital cushion which financial firms keep on hand to weather shocks. Tuesday was the first day of the new stock being issued to existing shareholders. "The environment seems sufficiently stable for the shares to find buyers among investors," analyst Ingo Frommen of LBBW bank commented. "Nevertheless, there are further tough years of restructuring ahead for Deutsche Bank." In its annual report, Deutsche said that it expects revenues to remain "broadly flat" this year compared with last, at around 30 billion euros.
