(Reuters) – Deutsche Bank has asked shareholders for €8 billion ($11 billion) in new cash to strengthen its balance sheet ahead of European stress tests and to help fund an expansion in U.S. investment banking as its rivals retreat.
Qatar’s royal family will become a major investor in Germany’s largest bank under the plan, unveiled as Deutsche Bank delayed or diluted most of its 2015 turnaround targets, saying the cost of scandals and new capital rules would remain high.
The capital increase gives Deutsche firepower for the investment banking drive after a pull-back by Barclays, UBS and others left a gap that it aims to fill as Europe’s top debt trader.
But it also underscores how the bank has fallen short of profitability targets and how burdensome fines and settlements and lagging profitability have hampered management’s efforts to fortify capital by retaining earnings.
Comment by politically correct Deutsche Welle (German equivalent of CBC):
Sheiks are not the problem
The yellow press, for its part, will surely latch onto a different aspect of the move. Yet again a Qatari sheik has a hand in a German corporation, some will say. It’s an easy target to stoke latent fears that foreign powers are usurping the crème de la crème of the German economy.
But such involvement has always been business as usual. Sheiks from the Middle East have often joined German concerns – and not once to a company’s detriment. The Qatari investment company that Deutsche Bank is bringing on board has long been a major shareholder of the Volkswagon Group and so far there haven’t been any complaints from the auto maker’s headquarters in Wolfsburg.