Deutsche Bank, Germany’s largest bank, sold about 60 million shares to the Qatari royal family as it announced plans to raise $11 billion in its second-biggest capital increase. The shares dropped.
Paramount Holdings Services, an investment vehicle of Qatar, purchased €1.75 billion (Dh8.81bn) of shares at €29.20 apiece, the Frankfurt-based bank said in a statement last night. Deutsche Bank plans to raise an additional €6.3bn from a rights offer in June.
Engulfed in legal probes over the alleged rigging of benchmark rates and currencies, Deutsche Bank has focused on shrinking its balance sheet to bolster finances ahead of a European Central Bank exam this year to assess banks’ ability to withstand shocks. The company said it aims to reach its 12 per cent return on equity goal in 2016, a year later than originally planned, and reduced a profitability target for the investment bank, as competitors including Barclays and UBS shrink their units.
The sale will help the bank “address challenging operating conditions,” including “tighter regulatory requirements, the increased cost of compliance and litigation, and headwinds in the macro-economic environment,” Deutsche Bank said in the statement.
A slump in debt trading has eroded earnings at the company over the past quarters. The capital increase is the biggest since the company sold about €10 billion of shares in 2010 to fund its purchase of Deutsche Postbank.
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