Capital Group Boosts Stake in Deutsche Bank
U.S. investor’s move sounds a note of confidence in troubled European banking sector
U.S. investor Capital Group Cos. has raised its stake in Deutsche Bank AG , sounding a rare note of confidence in prospects for the troubled European banking sector.
The asset manager, which has over $1.7 trillion under management, added another 3.61% stake to its existing holdings in Deutsche Bank AG, according to a securities filing Tuesday. Together with an investment the bank disclosed in March, Capital Group now owns 7.35% of Deutsche Bank.
Capital Group is backing the sector at a difficult time. Deutsche Bank is undergoing a turnaround plan involving cutting costs, scaling back its U.S. operations and shedding risky assets. The European banking sector broadly is facing structural hurdles including perennially low interest rates, a pileup of bad loans and a negative economic outlook, and banks now more than ever have been considering consolidation.
Deutsche’s shares have recovered since plunging in March with the rest of the market. They are up 13% this year while shares of most rivals are down.
The disclosure of the bigger stake in Deutsche Bank comes after rival Commerzbank AG last week said Capital Group had increased its stake to 5.31%, becoming the second-largest investor in Commerzbank after the German government.
Deutsche Bank first disclosed Capital Group’s holdings in February.
A spokesperson for Commerzbank declined to comment. Spokespeople for Capital Group and Deutsche Bank couldn’t immediately be reached.
Separately on Tuesday, Deutsche Bank said it would pay a fine of €13.5 million, equivalent to $15.9 million, for failing to report so-called suspicious activity reports on time related to money flows at Danske Bank. The Frankfurt public prosecutor’s office has dropped its investigation into Deutsche Bank and found there was no criminal misconduct, the bank said.