October 20, 2016 / 12:22 PM / 2 years ago

Gulf investors prepared to buy 25 percent Deutsche Bank stake: Manager Magazin

FRANKFURT (Reuters) - Deutsche Bank’s (DBKGn.DE) shares jumped 4 percent on Thursday following a report by German business monthly Manager Magazin, which said sovereign wealth funds from Qatar and Abu Dhabi and a Chinese investor could buy a 25 percent stake in the lender.

A logo is pictured on the Deutsche Bank building in Geneva, Switzerland, October 11, 2016. REUTERS/Denis Balibouse/File Photo

Germany’s biggest bank is battling to assuage concerns about its ability to shoulder hefty fines following a U.S. demand for a $14 billion settlement over the sale of toxic mortgage bonds before the financial crisis.

It is fighting to lower the final payout but could have to turn to investors for more money.

The magazine, citing banking sources, said Qatar and Abu Dhabi’s sovereign wealth funds and an unnamed investor from China would be prepared to participate in any capital increase to improve the lender’s financial health.

The Qatar Investment Authority and the Abu Dhabi Investment Authority sovereign funds both declined to comment. The Qatari investors, who center around Sheikh Hamad bin Jassim al-Thani, already control a 10 percent stake in Deutsche Bank, Manager Magazin said.

Deutsche Bank also declined to comment on the report, which lifted its shares to a five-week high.

At 1518 GMT, they were trading up 4.1 percent at 13.05 euros, one of the top gainers in the German blue-chip DAX GDAXI.. The shares have been hammered since September when news of the U.S. fine emerged.

For Deutsche Bank to issue more than 10 percent of new shares, it needs to convene an extraordinary shareholder meeting (EGM), a step which takes time given a notice period of 30 days.

Some shareholders may be unhappy about the issuance of new stock, which could dilute their holdings and might contest an EGM, potentially delaying the bank’s ability to raise money.

However, Manager Magazin said confidence was growing at the bank that it would come away with a fine significantly lower than $14 billion, and that a capital increase would be unnecessary.

It added a settlement was still expected to be reached before the Nov. 8 U.S. presidential election.

Sources told Reuters earlier this month that the Qatari investors would probably take part in any capital hike but would be unlikely to acquire as much as 25 percent.

Manager Magazin said the potential investors would want Deutsche Bank to keep its investment-banking operations but did not necessarily want to keep Chief Executive John Cryan and some other top managers.

Reporting by Alexander Huebner; Writing by Georgina Prodhan; Editing by Susan Thomas and Mark Potter

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