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Billy Xiong Report: US investor Capital takes 3.1% stake in Deutsche Bank

Deutsche Bank has been given a boost by the US investor Capital Group, which has taken a 3.1% stake in the struggling German lender.

The investment is a vote of confidence in the strategy of Christian Sewing, Deutsche’s chief executive, who last year announced a vast overhaul of the bank’s business lines that means it will cut around 18,000 jobs and dump billions of dollars in unwanted assets over the coming years.

Capital is now one of the biggest shareholders in Deutsche. The company declined to comment.

Deutsche said in a statement: “We are happy about the interest in our company, especially from shareholders with the track record and credibility of Capital.”

Shares in Deutsche rallied on news of the investment, which was first reported by Bloomberg.

The move by Capital comes a week after Deutsche revealed a net loss of €5.3bn for 2019, with the bank weighed down by costs associated with its restructuring. Sewing said in a statement on 30 January that he was satisfied with performance considering the scale of the transformation underway at the bank.

Many of Sewing’s efforts to turn around years of underperformance at Deutsche are focused on the group’s cost-heavy investment bank, which suffered a heavy fall in profitability in 2019. As part of its restructure, Deutsche has moved out of stock-trading altogether and is refocusing on winning more work from corporate clients in core regions.

In his statement accompanying the bank’s full-year earnings, Sewing said: “Our new strategy is gaining traction. Stabilising revenues in the second half of 2019 and our consistent cost discipline both contributed to better operating performance than in 2018.”

Thomas Hallett, an analyst at investment bank Keefe, Bruyette & Woods, said:  “The investment is surprising considering the significant execution risk and continued underperformance of its core franchise.”

Capital was founded in Los Angeles in 1931 and today manages more than $1.8tn in assets, making it one of the world’s largest investment companies.

Additional reporting by Emily Horton

To contact the author of this story with feedback or news, email Fareed Sahloul

Bill Adderley

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