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Morning Commentary: Preferred stocks post gains; Deutsche Bank rises on investment buzz
By Stephanie N. Rotondo
Seattle, Oct. 20 – The preferred stock market remained firm early Thursday, though market sources continued to lament a lack of liquidity.
The Wells Fargo Hybrid and Preferred Securities index was up 10 basis points at mid-morning.
Deutsche Bank AG was in the news again, as a German publication, Manager Magazin, reported that sovereign wealth funds from Qatar and Abu Dhabi, as well as an investor from China, would be willing to up their stake in the struggling financial institution.
The bank’s trust preferreds were pushing higher on the news.
The 6.55% TruPs (NYSE: DXB) were the most actively traded security at mid-morning, adding 29 cents, or 1.25%, to $23.42. The 8.05% TruPs (NYSE: DKT) gained 17 cents to trade at $24.9677, while the 7.6% TruPs (NYSE: DTK) improved 14 cents to $24.37.
The funds are already the German bank’s largest investor, holding about a 10% stake. The funds have expressed a willingness to increase that investment to 25%, according to the news outlet.
However, the investors might have some strings attached to their investment, such as cutting back investment-banking operations and ditching certain members of the management team – including John Cryan, chief executive officer.
Bloomberg meantime reported a story that seemed to back up Manager Magazin’s account. The article cited “one of the top 20 investors” as indicating that investors are wanting the bank to further shrink its securities trading unit and to cut more jobs.
Deutsche has already been scaling back some of its investment-banking activities and has previously announced up to 9,000 job cuts. According to Bloomberg, investors want that number to double.
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