Thursday’s Deutsche Bank Roundup: Alarming Bloomberg Report & Qatar To The Rescue?
Deutsche Bank’s (NYSE: DB) stock hit a new all-time low on Thursday of $11.19 as investors are still left in the dark regarding the bank’s outlook.
Here is a summary of two notable stories that helped move Deutsche Bank’s stock on Thursday.
Bail Out From … Qatar?
As a reminder, Deutsche Bank was slapped with a $14 billion fee from the U.S. Justice Department for its role in the financial crisis. A similar fee was handed to many other institutions but none were at such a high amount.
Various media sources reported that Deutsche Bank could absorb a fee in the low single digits (in billions of dollars) but anything above that it may need a bailout from the German government, or raise capital on its own.
At this time, reports are very conflicting with some saying Germany’s government is preparing a contingency bail-out package while other reports are denying that the government is cooperating in any way.
Bloomberg Gadfly commented in a report that Deutsche Bank’s largest single investor happens to be the royal family of Qatar. And if anyone has some extra cash laying around, it would most certainly be the royal family of an oil rich Middle East country.
Bloomberg Gadfly’s Lionel Laurent noted that the Qatar royal family has stood by Deutsche Bank before and boosted its stake to 10 percent of the entire bank back in February. Needless to say, shares of the German-based bank have tanked since then so it is not a given that the royal family, as flush with cash as they may be, would be willing to “throw good money after bad.”
In the event the Qatar royal family increases its stake even further, Deutsche Bank may no longer be forced to resort to actions that they may regret over the long-term, such as selling off business segments.
Bloomberg: Clients Are Fleeing Deutsche Bank
Shares of Deutsche Bank were trading near flat on the day and for a brief period of time were trading in the green. However, a report by Bloomberg sent Deutsche Bank’s stock plummeting to its new lows.
According to the Bloomberg report, several of Deutsche Bank’s clients are having concerns about doing business with the troubled firm even though it is technically Europe’s largest investment bank. Specifically, hedge funds that clear derivative trades with the bank may have withdrawn excess cash and positions given the banks ‘uncertain near-term.
Bloomberg, citing an internal bank document it has seen and a person familiar with the situation, added that around 10 hedge funds have cut their exposure