Deutsche Bank plans to attract up to 8 billion euros worth of capital input, with the Qatari royal family enlisted to add substantial investment, as the largest lender in Germany attempts to settle doubts about its capital status, the bank said on Sunday.
The lender had already generated 10.2 billion euros in 2010 and an additional 3 billion euros in 2013. However, the capital injection was not sufficient enough to give assurances of its capital position as the regulatory environment tightens, according to Reuters.
A statement released by Deutsche Bank said that an investment firm owned and run by Sheikh Hamad Bin Jassim Jabor Al-Thani of Qatari had placed a stake worth 1.75 billion euros already. The bank will generate an additional 6.3 billion euros via a rights issue to its current owners.
Deutsche Bank said it is emphasizing on measures that will expedite growth by bringing in top notch talent from the US banking sector, spending about 200 million euros within the next three years on computerized enhancements in Germany and the rest of Europe and employing about 100 advisers to serve its most critical corporate clients. The lender also plans to grow its wealth management personnel in core markets by 15% within the next three years.
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Individuals familiar with the developments said the bank’s supervisory board convened on Sunday to make arrangements for the capital hike.
The bank is facing new European Union rules that require lenders to keep more equity capital to cushion them from possible losses, hence the push to bolster its capital reserves. Deutsche has suffered following a decline in profits as well as increased costs of lawsuits.
According to FT, the financial institution announced in April that its common equity tier one ratio plummeted to 9.5% from 9.7% at the end of the first three-month period of 2014, putting it among banks with the worst capital positions in Europe.
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To contact the reporter of this story; Yashu Gola at yashu@forexminute.com
