Deutsche Bank Jumps as Lender Said to Consider Bond Buyback

Deutsche Bank AG jumped the most in more than four years as Germany’s biggest bank considers a bond buyback to help ease concerns about its funds, according to a person with knowledge of the matter.

While the bank has ample cash to make the purchases, no decision has been made and a buyback may yet be deemed unattractive, the person said, asking not to be identified because the talks are private. 

Such a move would focus on senior bonds and probably wouldn’t include the firm’s riskiest debt, known as CoCos, the Financial Times reported Tuesday. Renee Calabro, a spokeswoman for the Frankfurt-based bank, declined to comment.

Deutsche Bank co-Chief Executive Officer John Cryan has been seeking to reassure investors and staff that the bank is “rock solid” after the shares erased almost 2 billion euros ($2.3 billion) of the company’s market value on Monday. 

While the lender said on the same day that it has more-than-sufficient means to pay coupons on its riskiest debt both this year and next, the statement did little to reverse a selloff in credit markets.

The shares soared as much as 11 percent, the biggest intraday gain since October 2011, trading at 14.74 euros at 10:08 a.m. in Frankfurt. The bank has lost about 36 percent of its value this year.

Deutsche Bank has about 53.8 billion euros ($60.8 billion) of senior debt outstanding, according to data compiled by Bloomberg. The weighted average maturity of its 144 billion euros of debt is six years.

BNP Paribas Surges as Lender Targets Investment-Bank Cost Cuts

BNP Paribas SA pledged to overhaul its investment bank, cutting costs, to help free up capital as it reported a 52 percent drop in fourth-quarter earnings. The shares surged.

Net income at France’s biggest bank fell to 665 million euros ($744 million) from 1.38 billion euros a year earlier after a goodwill writedown at its Italian unit, the Paris-based company said Friday. That missed the 864 million-euro average estimate of five analysts surveyed by Bloomberg.

Europe’s largest banks are under pressure to shrink their securities units and focus on the most profitable businesses as regulators toughen scrutiny of riskier activities.

Under its overhaul, BNP is seeking to cut risk-weighted assets at the investment banking by 20 billion euros and trim 1 billion euros in costs by 2019 as it seeks to focus on businesses that generate higher fees and use less capital.

The shares jumped 3.6 percent to 42.44 euros at 9:10 a.m. in Paris. They have decreased about 19 percent this year.

Deutsche Bank AG, which runs Europe’s largest investment bank, and Credit Suisse Group AG both had losses at their securities units in the fourth quarter. Both rely more heavily on those units than BNP does and are also cutting back those businesses.

At UBS Group AG, which overhauled its businesses in 2012 to focus on wealth management, the investment bank reported a drop of 63 percent in pretax profit in the period.

At BNP’s corporate and institutional banking, CIB, which houses securities trading, pretax profit slipped 9.2 percent to 574 million euros in the fourth quarter from a year earlier. Global markets reported revenue of 1.18 billion euros, up 8.9 percent, with pretax profit slipping 12 percent.