The average U.S. household may owe $15,355 in credit card debt, but Deutsche Bank, a huge German lender, owes more than a couple billion dollars overall, after suffering a loss of $7.4 billion in 2015.
In a move intended to increase investor confidence in the German lender and the value of its securities, Deutsche Bank AG intends to buy back $5.4 billion of its senior unsecured debt, Fox Business reported.
The buyback is targeting $3.4 billion in euro-denominated securities and $2 billion in U.S. dollar-denominated securities, announced Friday afternoon at the end of a bad week for Deutsche Bank shares and the market at large.
The public tender offer was effective Friday for seven to 20 business days for euro- and U.S. dollar-denominated securities, respectively, according to the bank.
According to Marcus Schenck, the bank’s finance chief, Deutche Bank “is taking advantage of market conditions to repurchase this debt, lowering its debt burden at attractive prices. By repurchasing this debt below its issue price, the bank realizes a profit.”
In New York, JPMorgan CEO James Dimon sent the bank’s stock even higher when he purchased 500,000 shares in a show of support for the lender, which had experienced a 20% stock drop this year. The purchase, at $26.6 million, is about equivalent to his entire earnings in cash and stock from last year, said USA Today.
Plummeting oil prices have generated fears of looming economic hardships, and this lack of confidence could seriously damage bank’s profits and destroy their capital buffers. After JPMorgan confirmed Cimon’s massive stock purchase, JPMorgan’s stocks shot up more than 8%, and Deutsche Bank’s New-York listed stock shot up 12%. However, both companies shares are still dangerously low.