A stake worth $2.4bn has been placed with Paramount Holdings Services Ltd, an investment vehicle owned and controlled by Sheikh Hamad Bin Jassim Bin Jabor Al Thani of Qatar, Deutsche Bank said in a statement. Al Thani is Qatar's former prime minister and former head of the Gulf state's sovereign wealth fund.
The bank plans to raise another $8.6bn with a rights issue to existing shareholders, the statement said, and expects to issue a securities prospectus on 5 June.
The additional cash will give Deutsche Bank the funds to expand its investment banking operations, said Reuters. According to the news agency, Deutsche Bank intends to increase its operations in the US, after Barclays and UBS banks retreated in the market.
Deutsche Bank raised $14bn in equity in 2010 and a further $4.1bn in 2013. It also comes ahead of the European Central Bank (ECB) subjecting Europe's largest banks to stress tests designed to establish whether the banks could survive hypothetical worst case scenarios. the ECB is carrying out the tests ahead of becoming the European Union's single banking regulator in November. The decision to raise capital came as a "pro-active decision by the management board," a source told Reuters, not due to regulatory pressure.
Announcing the plans to secure new capital, co-chief executives of Deutsche Bank Jürgen Fitschen and Anshu Jain said in a statement: “Today, we are launching a package of measures designed to reinforce Deutsche Bank’s aspiration to be the leading client-centric global universal bank. We are decisively strengthening our capital, further improving our competitiveness, and investing in targeted growth initiatives across our core businesses.”
Fitschen and Jain said that the bank remains committed to Strategy 2015+, which outlines its strategic and financial aspirations for 2015 and beyond.
"The package of measures we are announcing today represents a decisive response to both the challenges and the opportunities in a changing macro-economic, competitive and regulatory environment," Fitschen and Jain said. “These measures enable Deutsche Bank to position itself for long-term, sustainable success in a time of historic change in the global banking industry"
According to Reuters, Deutsche Bank is keen to use the capital to expand its investment banking, especially in the US. Deutsche Bank said it would focus on an "accelerated growth programme" by hiring top bankers in the United States, investing some $274 million over three years on improving technology in its retail operations in Germany and Europe. It also plans to hire up to 100 advisers to support its biggest corporate clients, said Reuters. In addition, the bank plans to expand its wealth management team in key emerging markets by 15% over three years.
Al Thani and his family also owns in a private capacity the Qatari investment fund Al Mirqab Capital, which has agreed to buy UK-headquartered Heritage Oil in a £924 million cash takeover, it was announced recently. Heritage's main oil production is in Nigeria.