Deutsche Bank Plans To Raise € 8 Billion From Qatar

Deutsche BankBy Deutsche Bank AG (GIF format logo) [Public domain], via Wikimedia Commons

Deutsche Bank AG (NYSE:AG) in an effort to strengthen its capital strength is turning to the Qatari royal family and a rights issue to raise around eight billion euros.

The announcement means the bank is looking to raise an amount that as at the top end of analysts’ predictions. The bank will be raising €6.3bn in a rights issue and a further €1.75bn directly from Paramount Services Holdings. Paramount is the investment arm of the Qatari royal family.

Deutsche Bank AG Capital strength

In so doing, the extra capital will raise its common equity tier one ration to 11.8% from 9.5%. It will instantly raise the bank from under-capitalized much to the delight of many investors who have criticized the bank in the past.
This summer will see the European Central Bank begin a series of stress tests and asset quality reviews on the Euro-zone’s largest banks and with this addition of this new-found capital it’s expected that Deutsche Bank will now pass with flying colors.

Despite numerous calls by investors to strengthen its capital base , the bank responded late to the call, and will now dilute the holdings of many of these shareholders. There are, however, others who will not be pleased by the capital influx as the bank has lagged pears in recent years, and the move could put further pressure on shares.

Additionally, the capital increase will strengthen the bank’s leverage ratio that was a mere 3.1% at the end of the most recent quarter.

Stefan Krause, the lender’s chief financial officer, said last month: “We will not allow the financial strength of Deutsche to be questioned and are prepared to take action as and when required.”

Deutsche Bank AG and other Qatari investments

The direct investment arm of Sheikh Hamad bin Jassim bin Jabr al-Thani, the former prime minister of Qatar invested £6.1bn into Barclays Plc (NYSE:BCS) (LON:BARC) in 2008 which allowed it to avoid a bailout by the United Kingdom. The investment vehicle also holds large positions in Bank of America, the Agricultural Bank of China and Credit Suisse.

For exclusive info on hedge funds and the latest news from value investing world at only a few dollars a month check out ValueWalk Premium right here.

Multiple people interested? Check out our new corporate plan right here (We are currently offering a major discount)



About the Author

Brendan Byrne
While studying economics, Brendan found himself comfortably falling down the rabbit hole of restaurant work, ultimately opening a consulting business and working as a private wine buyer. On a whim, he moved to China, and in his first week following a triumphant pub quiz victory, he found himself bleeding on the floor based on his arrogance. The same man who put him there offered him a job lecturing for the University of Wales in various sister universities throughout the Middle Kingdom. While primarily lecturing in descriptive and comparative statistics, Brendan simultaneously earned an Msc in Banking and International Finance from the University of Wales-Bangor. He's presently doing something he hates, respecting French people. Well, two, his wife and her mother in the lovely town of Antigua, Guatemala. To contact Brendan or give him an exclusive, please contact him at theflask@gmail.com

Be the first to comment on "Deutsche Bank Plans To Raise € 8 Billion From Qatar"

Leave a comment

Your email address will not be published.