Deutsche Bank rises as activist Hudson takes stake

A New York-based activist hedge fund run by former JPMorgan finance chief Douglas Braunstein has built a 3.1% stake in beleaguered German lender Deutsche Bank.

Hudson Executive Capital said it was confident the German lender's new chief executive could kickstart its waning profits by pursuing a turnaround strategy that many investors were not convinced of.

The roughly $620m investment, Hudson's largest to date, was built up over months as Deutsche Bank shares dropped to record lows and led to the firm coming out the other end of the deal as a top-five shareholder in the bank.

Braunstein referred to Deutsche Bank as being "misunderstood and undervalued" thanks to the firm's previous management that was "as dysfunctional as you could basically find".

Hudson believes Deutsche was now on the right path with chief executive Christian Sewing at the helm. Sewing hopes to strengthen its traditional banking businesses, which services wealthy asset-management clients and European companies seeking deal advice, lending and cash management.

"Doug Braunstein and Hudson Executive come with deep backgrounds investing in financial services companies," Sewing said on Thursday.

"We appreciate Hudson Executive’s confidence in our ability to execute on our strategic objectives."

Deutsche Bank's market value has plummeted to about $20bn this year, about a third of its value before the financial crisis, as a result of billions of dollars in legal settlements, as well as technology and compliance shortfalls.

As of 1300 BST, Deutsche shares had picked up 2.77% to €8.89 each.