“Boom! Deutsche Bank Largest Customer, QATAR, Pulls the Plug”
“Germany’s largest bank, Deutsche Bank, is likely to spiral immediately into complete failure and collapse tomorrow as its largest lender, the country of Qatar, pulls the plug! “No future lending to Deutsche Bank” to keep it afloat under pressure of U.S. fine. According to sources the bank is now facing a crisis of gargantuan proportions after the Qatari royal family, who were reported to be involved in bond deals just last week, expressed concern over their long-term strategy. Analysts say this could be the final nail in the coffin for the bank which this week was accused of using stealth methods to woo investors. The bank is not commenting on the claims that their lifeline has been pulled as their credit instruments sit at almost records lows.
According to reports the bank’s Chief Executive John Cryan and Deutsche Bank’s chairman Paul Achleitner had been hoping to keep Qatar on side in the hope their continued support would help stablise the company. But insiders say Sheik Hamad bin Jassim al-Thani has now bowed out of future deals ahead of settlements with the U.S. Justice Department.
Deutsche is facing a £11.4billion fine over its American mortgage-backed securities business which allegedly led to the US housing crisis in 2008. The bank has repeatedly stated that it doesn’t need to raise fresh capital but this latest development is only set to hit them hard. Qatar sunk £1.57bn into Deutsche Bank two years ago as part of an €7.2bn (£6.5bn) capital increase, at the time paying €29.20 (£26.36) a share. Now with the share price having plummeted 45 per cent this year, they are said to have become concerned after losing almost €1bn.
Just last Friday, the bank announced a jobs freeze leaving serious concerns over its future. They have also revealed their Strategy 2020 project will leave 9,000 people out of work. They are also cutting 6,000 external contractor positions.
Earlier this week Express.co.uk reported on rumors the Qatar royal family were set to inject a 25 per cent equity stake of about £12.3bn. But risk analysts claimed there were underhanded dealings going on behind the scenes and that a number of other large banks are covering it up. New York based risk analyst David Hendler said customers who got involved in a £2.5bn private placement bond deal announced on October 7 were targeted using “unsavory sales practices.”The bank also went back to the US high-grade bond market on Tuesday to sell an additional £1.22bn worth of debt, offering more than double the yield it paid a year ago much to analysts’ concern.
Now Mr. Hendler says Qatar’s exit from future equity will spark a knock on effect. He said: “Deutsche Bank is relying on strong equity and bond support from its biggest holders and other friendly investors. The bank is running out of bond capacity as many US investors and counterparties are suspect of their credit trends. US investors are upset that they were not allowed to look at their bond deal last week and had to mark down in price their previously bought DB bonds. So DB losing funding capacity in US.
Now it seems Qatar is getting very nervous about future equity participation as it already is the largest holder and suffered mammoth losses on those investments. To rescue their overall investment they are thought to have been lead anchor investor in bond private placement and sought a more senior position in a ‘bail-in’ reorganization. Viola Risk thinks that they are throwing more good money after bad investments. DB has negligible earnings power.”
What goes around, comes around… soon to a bank near you