RBS share drop accelerates on stress test flop

Stressed. Shares in Royal Bank of Scotland have accelerated their losses this morning, falling over 4.5 per cent after the state-backed lender came in bottom of the heap in the Bank of England’s latest stress tests. RBS failed the toughest ever stress tests carried out by the BoE, with results this morning showing the lender’s […]

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Renminbi strengthens further despite gains by dollar

The renminbi on track for a fourth day of firming against the dollar on Wednesday after China’s central bank once again pushed the currency’s trading band (marginally) stronger. The onshore exchange rate (CNY) for the reniminbi was 0.28 per cent stronger at Rmb6.8855 in afternoon trade, bringing it 0.53 per cent firmer since it last […]

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Sales in Rocket Internet’s portfolio companies rise 30%

Revenues at Rocket Internet rose strongly at its portfolio companies in the first nine months of the year as the German tech group said it was making strides on the “path towards profitability”. Sales at its main companies increased 30.6 per cent to €1.58bn while losses narrowed. Rocket said the adjusted margin for earnings before […]

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Spanish construction rebuilds after market collapse

Property developer Olivier Crambade founded Therus Invest in Madrid in 2004 to build offices and retail space. For five years business went quite well, and Therus developed and sold more than €300m of properties. Then Spain’s economy imploded, taking property with it, and Mr Crambade spent six years tending to Dhamma Energy, a solar energy […]

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Nomura rounds up markets’ biggest misses in 2016

Forecasting markets a year in advance is never easy, but with “year-ahead investment themes” season well underway, Nomura has provided a handy reminder of quite how difficult it is, with an overview of markets’ biggest hits and misses (OK, mostly misses) from the start of 2016. The biggest miss among analysts, according to Nomura’s Sam […]

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Categorized | Banks, Insurance

Deutsche raises €1bn in Abbey Life sale

Posted on September 28, 2016

File photo of workers walking past the London headquarters of Deutsche Bank in the City of London...Workers walk past the London headquarters of Deutsche Bank in the City of London, Britain in this May 19, 2015 file photo. Deutsche Bank posted a 20 percent rise in revenue at its lucrative bond trading business in the third quarter, helping to take the sting out of its previously announced record 6 billion-euro ($6.6 billion) group pre-tax loss. REUTERS/Toby Melville/Files©Reuters

Deutsche Bank has reached an agreement to sell its Abbey Life insurance business to Phoenix Group for €1.09bn, in a move that will give a small boost to the German bank’s capital position.

The deal helped spur a rise in Deutsche’s shares Wednesday after hitting their lowest levels in more than two decades this week. The shares gained 3.2 per cent in early trading to €10.90.

    The financial position of Germany’s biggest bank has been under scrutiny in recent weeks, after it emerged that the US Department of Justice had made an initial request of $14bn from Deutsche to settle allegations of mis-selling mortgage-backed securities.

    Deutsche has said that it has no intention of paying anywhere near this sum, but the prospect of a big fine has sparked speculation about whether the bank could be forced into a capital raising, or even need a state bailout. Deutsche insisted on Monday that neither was on the agenda.

    Deutsche said on Wednesday that the sale of Abbey Life would generate an €800m pre-tax loss, due to the impairment of goodwill and intangible assets.

    However, it said that the sale would have improved its core tier one capital ratio — a measure of financial strength — by 10 basis points. Deutsche’s ratio stood at 10.8 per cent at the end of June, comfortably above the minimum required by regulators but well below many of its peers.

    The bank also said that the loss on the sale was “not expected to have a material impact” on Deutsche’s so-called available distributable items, which determine the payment of coupons on some of its hybrid capital.

    John Cryan, Deutsche’s chief executive, said that he was “pleased” to have reached an agreement to sell Abbey to a specialist life fund provider.

    He added that Deutsche’s asset management arm would “continue to focus on its core businesses of active, passive and alternatives”. “We continue to build a simpler and better Deutsche Bank,” he said.