Deutsche Bank Bolstered by Qatar Royals in $11bn Share Sale

Deutsche Bank has said the Qatar royal family is to be the anchor investor in a multi-billion fundraising exercise, designed to boost its capital position ahead of a European Central Bank test this year to spot risks in eurozone banks.

A stake worth €1.75bn (£1.43bn, $2.4bn) has been placed with Paramount Holdings Services, an investment vehicle owned and controlled by Sheikh Hamad Bin Jassim Bin Jabor Al-Thani of Qatar, Deutsche Bank said in a statement.

The German bank proposes to raise another €6.3bn (£5.14bn, $8.6bn) in a rights issue to existing shareholders.

The Qatari royal family has agreed to purchase 60 million of the 360 million new shares being issued by the bank.

The proposed capital hike will bolster the bank's financial strength, its core Tier 1 capital ratio, by about 230 basis points to 11.8% of its assets. This stood at 9.5% weighted by riskiness, at the end of the first-quarter of 2014. The ratio stood below 6% in mid-2012, the statement added.

By comparison, rivals UBS and Credit Suisse maintain core Tier 1 capital ratios of 13.2% and 10% respectively.

Jürgen Fitschen and Anshu Jain, the co-chief executives of Deutsche Bank, said in a statement: "We are decisively strengthening our capital, further improving our competitiveness, and investing in targeted growth initiatives across our core businesses.

"The package of measures we are announcing [on 18 May] represents a decisive response to both the challenges and the opportunities in a changing macro-economic, competitive and regulatory environment."

Deutsche bank, and a dozen other banks, are being investigated for supposed FX fixing activities.

Germany's banking watchdog, the Federal Financial Supervisory Authority (BaFin), has initiated an investigation into alleged foreign exchange market fixing at the bank.

BaFin has put the case at the top of its priority list and moved it into "special investigation" category.