Deutsche Bank has announced plans to buy back £3.7bn of its debt in an attempt to demonstrate its financial strength.
The move follows a collapse in the share price of Germany’s biggest bank, which has wiped 40% off its stock market value since the start of the year. The bank has provided the focus this week of mounting concern about the strength of the global banking sector.
After a volatile week of trading, which began on Monday with a 9.5% slump in its shares, the bank’s shares moved higher on Friday. They were up 10% although the rally slipped back to 8% after the bond buy-back was announced.
The bond buy-back follows the personal intervention of the bank’s chief executive, John Cryan, a Briton, to shore up confidence in the bank. He wrote to staff on Tuesday to reassure them that the bank was “rock solid” despite the sustained pressure it was under on the stock market.
Deutsche’s bonds have also been in focus because of concerns it might not be able to make payments on a new type of bond intended to be converted into shares during a crisis. The bank has denied such concern.
The bonds it is offering to buy back are more conventional bonds. The bank said that its “strong liquidity position” means it could offer to buy back €3bn (£2.3bn) of debt and $2bn (£1.38bn) of debt issued in dollars.