By Will Caiger-Smith
NEW YORK, Feb 8 (IFR) - Deutsche Bank's Additional Tier 1bonds traded up half a point on Monday after the bank issued astatement to reassure investors it had enough cash to paycoupons.
Deutsche said late on Monday it had 1bn (US$1.12bn) to payAT1 coupons in 2016.
The bonds were still trading at hefty discounts to par, bidat dollar prices of between 73 and 91, and remained down between1.5 and six points on the day.
On Monday, Deutsche also said its pro-forma 2017 paymentcapacity was around 4.3bn (US$4.8bn), but said the final figurewould depend on its 2016 operating results and movements inother reserves.
It made the statement after the close of European markets ona day when its bonds and shares were hit hard.
The notes have been in a freefall since Deutsche reportedits Q4 results on January 28, with investors concerned the bankdid not have a big enough cash buffer to pay the coupons.
Deutsche's shares slumped 9.5% to close at 13.82, afterfalling as low as 13.46, their lowest level since January 2009.
While the announcement helped stem selling in the AT1 bonds,market participants said the fact the bank felt it necessary torelease the information was not a good sign.
"Banks are built reputationally on confidence and strength,"said a DCM banker. "The fact this was required is very telling."
Deutsche Bank's shares have crashed 39% this year amidconcern new CEO John Cryan will need to raise capital again tostrengthen the bank's balance sheet as it gets battered bylitigation costs and weak trading.
Fourth quarter results for its investment bank were also farweaker than at its US rivals.
On Monday, shares of Santander and UniCredit also fell 5%and Barclays and BNP Paribas were both down 5%, as the Europeanindex lost 5.6%.
Analysts said concerns about losses from energy loans, thenegative impact of low interest rates and a gloomy outlook forthe European economy were all negatives weighing on sentiment.
Weak results from European lenders had also stoked concernthe industry is structurally unprofitable, and will remain sofor years to come. (Reporting by Will Caiger-Smith; Editing by Steven Slater andShankar Ramakrishnan)
Barclays (BARC)
