Why Shares of Deutsche Bank AG Jumped 14% Today

By Markets Fool.com

Photo by: Flickr userBjrn Lczay.

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What's happening?

Shares of Deutsche Bank AG (NYSE: DB) are on the move on Friday, rising by about 14% as of 3:45 p.m. EDT.

So what

Deutsche Bank shares rose after the bank's CEO, John Cryan, wrote a message to the bank's employees to address reports that a handful of the company's hedge-fund clients had reduced the amount of business they do with the bank. Cryan noted that the report should beconsidered "in the context of the bigger picture: Deutsche Bank overall has more than 20 million clients."

Further helping the stock were reports that the bank may settle with the U.S. Department of Justice for as little as $5.4 billion, significantly less than the $14 billionoriginally suggested by the DOJ. Deutsche Bank has yet to confirm the actual figures.

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Now what

Any billion-dollar settlement with the DOJ is significant as a percentage of the company's market cap. The current share price imputes a market value for the bank of just under $18 billion.

Earlier in the week, analysts worried that the settlement could force Deutsche Bank to raise capital, presumably with dilutive stock issuance. For now, though, markets seem pleased that a settlement with the DOJ may cost less than originally feared, potentially allowing the bank to avoid dilutive capital raises.

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Jordan Wathen has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.