Deutsche Bank is aware that investors and customers are worried if it is ever able to service its obligations in the face of the global economic issues, and so it is taking steps to repurchase senior unsecured securities of about $5.4 billion in both Euros and US dollars – without any change to its existing 2016 funding plan - Bloomberg reports.
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The bank is assured that buying back these bonds in dollars and euros would reassure its investors and customers that it has enough funds to service its obligations without any hassles. To this end, the bank is making to repurchase bonds worth €3 billion ($3.4 billion) in euros and also $2 billion bonds in USD.
Deutsche Bank AG felt it is necessary to take this step if investors’ confidence would be restored following the event of its insuring senior debt with credit-default swaps increase to its highest – the highest of such in 5 years.
And come to think of it, this is the first bank in the troubled euro zone to reassure its investors that they need not fear anything about their dividends or if the bank is earning enough to service financial responsibilities.
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“This is a tool Deutsche Bank can use to reduce the panic,” said Roger Francis, an analyst at Mizuho International Plc in London. “It doesn’t really address the underlying concern that people have about the bank. They need earnings to pay dividends and subordinated bond coupons and that’s where the question marks are.”