Deutsche Tight-Lipped On Rumoured Qatar Finance

Tom Burroughes

29 January 2019

Deutsche Bank, which is due to report its full-year financial results on 1 February, has won a commitment for new investment from Qatar, according to Bloomberg, citing unnamed sources. The embattled bank is also rumoured to be thinking of merging with another lender, possibly Commerzbank, reports have said.

The Frankfurt-listed bank declined to comment on the matter when contacted by WealthBriefing.

The European lender has seen its shares fall amid a period of painful restructuring, thin margins and a number of regulatory punishments. In a country where manufacturing exports are such an important driver of GDP growth, it is thought that policymakers in Berlin will not want to see Germany’s largest bank fall into trouble.

An investment into the bank is likely to be made through the Qatar Investment Authority, the country’s sovereign wealth fund. Two other Qatari investment vehicles, controlled by members of the royal family and other prominent politicians, already own a stake in Deutsche Bank, the report noted.

The issue is sensitive because Qatar’s authorities are at odds with other members of the Gulf Co-operation Council – it is accused of supporting terrorism, which it denies – and has also signalled that it intends to leave the OPEC grouping of major oil exporters. In another twist, Barclays, the UK bank that avoided a bailout in the 2008 financial crisis, is accused of paying Qatar £322 million in secret fees to obtain the funds.

If Deutsche and Commerzbank were to merge, it might raise eyebrows from regulators concerned that Germany’s banking sector, while containing a large number of small players, including scores of old private banks, is highly concentrated at the higher end. More consolidation might create a “too big to fail” problem at the top. According to the European Central Bank in 2016, small and medium-sized banks – less significant institutions – which include the Sparkassen , account for around 35 per cent of the total balance sheet of the German banking sector.