Deutsche Bank Is ‘Absolutely Rock-Solid (but…)

Deutsche Bank AG co-Chief Executive Officer John Cryan told employees that Germany’s largest bank is “rock solid” as investor concern about capital and funds drove down the value of its stock and bonds.

In a memo on Tuesday, Cryan wrote that the Frankfurt-based lender has a “strong” capital and risk position and “took advantage of this strength to reassure the market of our capacity and commitment to pay coupons to investors” who hold the bank’s additional Tier 1 capital. The comments come just hours after Chief Financial Officer Marcus Schenck told staff that the bank is able to meet obligations on the notes both this year and next.

Cryan, 55, has been seeking to boost capital buffers and profitability by cutting costs and eliminating thousands of jobs as volatile markets undermine revenue and outstanding regulatory probes raise the specter of fresh capital measures to help cover continued legal charges. The cost of protecting Deutsche Bank’s debt against default has more than doubled this year, while the shares have dropped about 42 percent.

“Cryan will do everything in his powers to try and avoid” a capital increase, Christopher Wheeler, an analyst at Atlantic Equities, said in an interview with Bloomberg Television on Tuesday. “It’s really a matter quite frankly of how much more litigation they have to deal with and whether or not they can actually start to generate some core earnings at their investment bank.”

The shares dropped 5 percent to 13.14 euros at 4:58 p.m. in Frankfurt, to the lowest since 1992, after declining as much as 12 percent on Monday. The cost to protect against losses on the bank’s riskiest debt reached the highest level since the height Europe’s debt crisis in 2011, according to data compiled by Bloomberg.

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