Deutsche Bank AG has secured a commitment for additional investment from Qatar as the troubled German lender seeks to bolster its finances, according to people with knowledge of the matter.
The investment is likely to be made through the Qatar Investment Authority, the country’s sovereign wealth fund, the people said, asking not to be identified because the talks are private. Two other Qatari investment vehicles, controlled by members of the royal family and other prominent politicians, already own a stake.
While the discussions are at an advanced stage, no final agreement has been reached, said the people. The timing and the size of the investment aren’t clear. A Deutsche Bank spokesman declined to comment. Representatives for QIA didn’t immediately return messages outside of normal business hours.
The German government has been moving to fix Deutsche Bank as shares of the lender have slumped by almost half in the past year. The government is studying ways to make it easier for the lender to merge with Commerzbank AG, Bloomberg reported last month, while also considering other possibilities such as seeking fresh investment from existing or new shareholders.
Deutsche Bank, which has been trying to regain its footing after years of restructuring in the aftermaths of the global financial crisis, faces broadening U.S. scrutiny as a leading Republican lawmaker joined Democratic colleagues in questioning the lender’s steps to combat money-laundering amid reports that its U.S. unit may have been a key conduit for dirty cash.
“There’s a potential liability ahead in case the bank is fined by the regulators in the U.S. for those accusations of money laundering,” said Arjuna Mahendran, a former central bank of Sri Lanka governor and former chief investment officer at Emirates NBD Wealth Management. “The fear is that you can’t quantify the fine, that’s the known unknown. So they may do both, get the Qataris to put in some equity and merge with Commerzbank to fill any holes created by having to pay the anticipated fine.”
QIA, which manages $320 billion, is known for its big-name investments and has purchased stakes in companies including Rosneft PJSC and Volkswagen AG. QIA chairman Sheikh Mohammed bin Abdulrahman Al Thani suggested in an interview at the World Economic Forum in Davos that Deutsche Bank is among the major German companies the sovereign wealth fund is talking to about potential stake purchases.
Last year, Qatar said its projected investment of 10 billion euros ($11 billion) in the German economy over the next five years would be its largest single investment in the country to date.
“It makes sense for the Qataris to increase their stake in Deutsche Bank as Qatar strategically wants to establish linkages with European countries and the U.S. to diversify,” said Mahendran, who now advises several family offices in Singapore and the Middle East. “The merger with Commerzbank makes sense to get a bigger balance sheet, which means they will have more cushion to absorb any shocks to a potentially large fine from the regulators.”