* Qatari investors have no plans to sell shares
* Bankers planning to meet with Deutsche CEO in Washington
* Sources say discussions unlikely to focus on capital hike
* Deutsche shares down nearly 50 pct this year
By Tom Finn and Arno Schuetze
DOHA/FRANKFURT, Oct 7 Deutsche Bank
has secured support from its largest shareholder and more German
lawmakers as it grapples with a confidence crisis following U.S.
authorities' demands for up to $14 billion to settle allegations
it mis-sold mortgage-backed securities.
Qatari investors who own the largest stake in Deutsche Bank
do not plan to sell their shares and could consider buying more
if the embattled German bank 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.
Deutsche Bank head 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
U.S. to discuss the lender's options, people familiar with the
schedule of Cryan's U.S. trip 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 deal 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 on
Friday 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 the bank was reacting to
the risks it faced.
Gabriel said the government did not have its own risk
assessment for the bank but that Germany was keen to see the
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 told a
Germany's flagship bank is under heavy pressure as it fights
the penalty of up to $14 billion that the U.S. Department of
Justice (DOJ) plans to impose for misstating the risks of
securities the bank sold ahead of the 2008-2009 financial
crisis. The setback sent its shares to a record low last week
and worried clients.
Deutsche says it expects to settle with the DOJ for far less
than $14 billion, in line with other big banks that negotiated
smaller fines over similar allegations.
On Thursday, IMF chief Christine Lagarde gave Deutsche Bank
some tough advice, saying it needed to reform its business model
and rapidly reach a deal with U.S. regulators over a potentially
Jeroen Dijsselbloem, the chairman of the Eurogroup of
finance ministers from the countries that use the euro common
currency, said the $14 billion U.S. fine demand was too big and
potentially damaging to financial stability.
Deutsche is in the midst of a deep overhaul that includes
slashing jobs from a workforce of around 100,000, revamping
information technology and shrinking non-core assets. In
contrast to some European peers, it is sticking with its
strategic focus on 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 on the mortgages case is deemed impossible as few
investors will be willing to buy shares without being able to
gauge the impact on the lender's capital, equity capital markets
"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,
referring to Deutsche Bank shareholders' authorisation on
capital issuance and a likely discount on new shares of 20-30
"A cap hike could be done in the first half of 2017 at the
earliest," another banker said.
Deutsche Bank is a global equity capital markets powerhouse
itself, ranked 7th worldwide according to Thomson Reuters data,
so it has the necessary expertise itself to prepare for a
When planning a rights issue Deutsche Bank will, however,
rely on help from other investment banks. In 2014, 25 banks
helped it pull off a rights issue.
Most of the banks will be called in just days before the
deal, which will likely be structured as a fully underwritten
rights issue with banks guaranteeing to take on shares to sell
on to investors.
"At this stage, no bank has gotten any mandate for a cap
hike," a person close to Deutsche Bank said.
The bulk of new shares would probably be bought by the usual
mix of investment funds, pension funds and hedge funds.
However, at the same time, some of Germany's top industrial
companies have revived a decades-old network to discuss taking a
direct stake in the lender as a way to help shield the bank, one
executive at a large DAX-listed company has said.
(Additional reporting by Katrhin Jones, Alexander Hübner,
Pamela Barbaglia, Sophie Sassard, Joseph Nasr and Andrea Shalal;
editing by Peter Graff)