BERLIN (The Deal) -- Leading German lender Deutsche Bank (DB) on Monday said it would raise 8 billion euros ($10.96 billion) in cash from investors including Qatar's royal family as it faces a European Central Bank stress test later this year.
Deutsche said it sold 1.75 billion euros worth of new shares to Paramount Services Holdings Ltd., the Qatar family's investment vehicle, at 29.20 euros apiece, a 5.2% discount to the shares' Friday close. That stock issue equates to about 6% of the Frankfurt institution.
The German bank will raise the remaining 6.3 billion euros in a June sale to investors at an as-yet unknown price and led by an unnamed banking consortium
European banks are girding for a fresh round of stress tests this summer to gauge their resistance to financial crisis.
The tests will be conducted by the European Central Bank as it prepares to become the Continent's chief banking supervisor in November and will measure banks against a targeted common Tier 1 capital ratio of 8%, falling to 5.5% in adverse situations. Although the regulator has said it will look at Tier 1 capital, watchdogs are also increasingly considering other factors, such as leverage ratios, because they fear banks have found ways to hide risk while cresting the Tier 1 requirement.
Deutsche said the sale will boost its Tier 1 ratio to 11.8% from 9.5% and also help it hire key new personnel in the U.S., in banking for international corporations and in wealth management, where it wants to grow 15% in the next three years.