DB Deutsche Bank Aktiengesellschaft

By Jenny Strasburg and Madeleine Nissen 

Deutsche Bank AG said it will buy back $5.4 billion of its senior unsecured debt, in a move designed to bolster investor confidence in the German lender's liquidity and in the value of its securities.

The announcement came at the end of a volatile week for Deutsche Bank shares and the broader market for bank stocks, particularly in Europe.

Deutsche Bank, which is undergoing a broad restructuring program under new management, has been hit harder than most big peers as investors have worried about the bank's capital buffers, litigation costs and the extent of its ability to profit amid market turmoil.

The buyback offer announced Friday afternoon in Europe targets up to EUR3 billion ($3.4 billion) in euro-denominated securities and $2 billion in U.S. dollar-denominated securities.

The announcement came a day after J.P. Morgan Chase & Co.'s shares rebounded on news that the U.S. bank's chairman and chief executive, James Dimon, had bought 500,000 of J.P. Morgan's shares, for $26.6 million.

Deutsche Bank said its public tender offer was effective Friday for seven to 20 business days for euro- and U.S. dollar-denominated securities, respectively.

The buyback "certainly isn't a negative for the market" but "the tender levels don't look that attractive for investors," said Tom Ross, a portfolio manager at Henderson Global Investors, who doesn't hold Deutsche Bank bonds. He said the buyback doesn't address bigger questions about Deutsche Bank's capital levels.

The bank said Friday it had EUR215 billion in liquidity reserves at the end of 2015, as previously disclosed.

Deutsche Bank "is taking advantage of market conditions to repurchase this debt, lowering its debt burden at attractive prices," Marcus Schenck, the finance chief, said in a statement. "By repurchasing this debt below its issue price, the bank realizes a profit."

Before the announcement, Deutsche Bank shares were up 8% Friday. The announcement boosted them slightly, to near 10% on the day. Word of a potential bond buyback had helped stabilize Deutsche Bank shares earlier in the week following a 9.5% fall on Monday.

Shares in the lender have been whipsawed this week amid questions about the bank's restructuring and ability to pay optional interest payments on its riskiest debt.

The shares are down about 35% this year.

Deutsche Bank said Friday the bond buyback wouldn't affect its ability to pay interest on its riskiest bonds, called Additional Tier 1 bonds, which are also commonly referred to as contingent convertible bonds, or CoCos.

The bank earlier this week issued a rare statement reassuring the market it had sufficient funds to pay interest on that riskier debt, and in a letter to employees, co-Chief Executive John Cryan said Deutsche Bank is "absolutely rock-solid."

On Friday, Germany's finance minister said he wasn't concerned about the financial health of Deutsche Bank.

"Deutsche Bank has sufficient capital," Wolfgang Schäuble told journalists in Brussels. "Deutsche Bank is a strong bank," he said.

Write to Jenny Strasburg at jenny.strasburg@wsj.com and Madeleine Nissen at Madeleine.Nissen@wsj.com

(END) Dow Jones Newswires

February 12, 2016 10:32 ET (15:32 GMT)

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