Deutsche Bank AG’s share price down, sells 60 million shares to the Qatari royal family

The biggest bank in Germany – Deutsche Bank AG made an official statement, revealing that about 60 million if its shares were sold to the Qatari royal family. The bank has set a goal of raising 8 billion euros (11 billion dollars) in its second-largest capital increase.

The co-Chief Executive Officers – Jürgen Fitschen and Anshu Jain said in the statement, which was cited by the Wall Street Journal: “We are launching a package of measures designed to reinforce Deutsche Banks 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.”

The banks announcement comes at a moment, when the business and regulatory environment is quite challenging and demands improving the current positions of Deutsche Bank AG. In addition, the banks earnings have been reduced by a collapse of debt trading during the last few financial quarters.

However, the bank must be aware of the fact that meeting its profit goals may be delayed by the capital increase, which is considered to increase the capacity of Deutsche Banks financial stability.

A total of 360 million new shares will be issued by the bank. According to Deutsche Banks statement the Qatary royal family will purchase 60 million of the shares via Paramount Holdings Services Ltd, which is an investment vehicle of the country. The shares are estimated to 1.75 billion euros. The existing investors will get the opportunity to buy the remaining 6.25 billion euros via the so-called rights offering.

According to the information shared in the banks official statement, 29.20 euros per share will be paid by the Qatari family. The latter will get a discount that amounts to 2.5%. According to people with knowledge of the matter, the discount for the 300 million additional shares that will be offered to the existing shareholders is expected to be higher.

Deutsche Bank AG was losing 1.51% to trade at 30.27 euros per share by 9:01 GMT, marking a one year change of -18.24%. According to the information published on the Financial Times, the 34 analysts offering 12-month price targets for Deutsche Bank AG have a median target of 38.00, with a high estimate of 62.00 and a low estimate of 26.00. The median estimate represents a 23.64% increase from the last price of 30.74.