* Qatari investors have no plans to sell shares
* Bankers planning to meet with Deutsche CEO in Washington
* Sources say talks unlikely to focus on capital hike yet
* Deutsche shares down nearly 50 pct this year
(Adds magazine report, sources)
By Tom Finn and Arno Schuetze
DOHA/FRANKFURT, Oct 7 Deutsche Bank
has secured backing from its largest investor and is seeking
advice from other banks as it scrambles to restore market
confidence undermined by a demand by U.S. authorities for up to
$14 billion over mis-selling allegations.
Qatari investors who own the largest stake in Germany's
largest bank do not plan to sell their shares and could consider
buying more if it decides to raise capital, sources familiar
with Qatari investment policy told Reuters.
"Purchasing more (Deutsche Bank) stock - that could be
considered ... which is not to say there are any imminent plans
to do that," said a source close to the Qatari investors who own
just below 10 percent in Deutsche Bank. The source declined to
be identified as the matter is confidential.
If a capital hike does turn out to be required, the Qatari
investors would probably take part in it as they want to keep
their roughly 10 percent stake, a second source close to the
Deutsche shares plunged to record intra-day lows below 10
euros last week on Friday and although they have since rebounded
to just above 12 euros, they are 13 percent below last month's
peak and 46 percent below their close at the end of last year.
That implies the Qataris may have lost, on paper, over $1.2
billion on their investments in the bank.
German weekly Der Spiegel reported, without citing sources,
that Qatari investors around Sheikh Hamad bin Jassim al-Thani,
with backing from sovereign wealth funds, were mulling taking a
25 percent in the lender, sending Deutsche Bank's U.S.-listed
But sources familiar with the situation told Reuters it was
unlikely that the Qataris would acquire a stake as big as 25
Deutsche Bank declined to comment and Sheikh Hamad was not
immediately available for comment.
HIGH LEVEL TALKS
Deutsche Bank CEO John Cryan, who is attending the
International Monetary Fund and World Bank's autumn meetings in
Washington, is due to meet with the Department of Justice as
well as with senior managers of other investment banks in the
United States to discuss the lender's options, people familiar
with his schedule said.
However, the talks with other bankers are expected to focus
on immediate steps the German bank may be able to take such as
asset sales, rather than asking shareholders for fresh cash.
"The cap hike issue will unlikely be the focus of most of
those meetings," one of those people said, adding that pulling
off a capital-raising would be a well-rehearsed exercise which
does not need too much advance discussion.
Deutsche Bank declined to comment on Cryan's discussions.
Separately, German Economy Minister Sigmar Gabriel said that
while Deutsche Bank faced enormous challenges with potential
fines in the United States, moves by its leadership to change
the bank's business model showed it was reacting to the risks.
Gabriel said the government did not have its own risk
assessment for the bank, but that Germany was keen to see the
146-year-old bank succeed in the longer term.
"It's completely obvious that we have an interest in
Deutsche Bank again becoming a stable financial institution that
is successful nationally and internationally," Gabriel said.
Germany's largest bank is under heavy pressure as it fights
the penalty that the U.S. Department of Justice (DOJ) plans to
impose for mis-stating the risks of securities the bank sold
ahead of the 2008-2009 financial crisis. This sent its shares to
a record low last week and spooked clients.
Deutsche Bank's proposed fine has emerged as another bone of
contention between the United States and the European Union
after the EU said earlier this year that U.S. tech giant Apple
Inc owed $14 billion in taxes. The chairman of euro
zone finance ministers, Jeroen Dijsselbloem, told Reuters that
the fine was disproportionate and could place Europe's financial
system at risk.
"Here is a financial institution which needs to be
restructured and strengthened and needs to bring in new capital
and we cannot then have an even bigger amount of capital being
pulled out by the American authorities. That is really
counterproductive, to put it mildly," he said.
SMALLER FINE IN STORE
Deutsche says it expects to settle with the DOJ for far less
than $14 billion, in line with other big banks that negotiated
over similar allegations.
IMF chief Christine Lagarde gave it some tough advice on
Thursday, saying it needed to reform its business model and
rapidly reach a deal with U.S. regulators.
Deutsche is cutting back a workforce of around 100,000,
revamping information technology and shrinking non-core assets.
Unlike some European peers, it is sticking with investment
banking, with a global reach that the IMF says makes it among
the riskiest of all banks.
Launching a capital increase before a settlement with U.S.
authorities is seen as unlikely as few investors will be willing
to buy shares without being able to gauge the impact on the
lender's capital, equity capital markets bankers said.
"And even when a settlement is eventually reached, Deutsche
Bank is likely to wait for its share price to recover before
launching a cap hike. Currently it would only be able to raise
4.5-5 billion euros and they may want more," one banker said.
"A cap hike could be done in the first half of 2017 at the
earliest," another banker said.
Deutsche Bank ranked 7th worldwide in global equity capital
markets according to Thomson Reuters data. While it has the
in-house expertise for a capital increase it will rely on other
investment banks. In 2014, 25 helped with its rights issue.
"At this stage, no bank has gotten any mandate for a cap
hike," a person close to Deutsche Bank said.
Most banks will be called in just days before any deal,
which will likely be structured as a fully underwritten rights
issue with banks guaranteeing to take on shares to sell on to a
mix of investment funds, pension funds and hedge funds.
Meanwhile, some of Germany's top industrial companies have
revived a decades-old network to discuss taking a direct stake
in the bank as a way to help shield it, one executive at a large
DAX-listed company has said.
(Additional reporting by Katrhin Jones, Alexander Hübner,
Pamela Barbaglia, Sophie Sassard, Joseph Nasr, Andrea Shalal and
Jan Strupczewski; Editing by Jonathan Oatis and Alexander Smith)