Qatar Sheikh Said to Use Margin Loan for Deutsche Bank Stake

Updated on
  • Sheikh Hamad raising $1 billion to subscribe to share sale
  • Bank of America structured and agreed to finance the deal

Qatari Prime Minister Sheikh Hamad bin Jassim bin Jabr Al Thani, in 2013.

Photographer: STR/AFP via Getty Images

One of Deutsche Bank AG’s key Qatari shareholders is using a margin loan of about $1 billion, backed by the company’s stock, to fund his participation in the lender’s rights offer, according to people familiar with the matter.

Bank of America Corp. structured and agreed to finance the loan to former Qatari Prime Minister Sheikh Hamad bin Jassim bin Jabr Al Thani, the people said, asking not to be identified as the information is private. Hamad bin Jassim and the former emir of the country, Sheikh Hamad bin Khalifa Al Thani, have a combined stake of about 10 percent in Deutsche Bank, a level which they currently plan to maintain, the people said.

Representatives for Hamad bin Jassim’s office in Doha didn’t immediately respond to a request for comment. A spokeswoman for Bank of America declined to comment.

Deutsche Bank is tapping investors to raise 8 billion euros ($8.5 billion) as part of a strategic overhaul under Chief Executive Officer John Cryan. Hamad bin Jassim first invested in the lender in 2014, injecting 1.75 billion euros through his investment vehicle Paramount Holdings Services Ltd. That investment was also financed with a margin loan, people familiar with the matter said at the time.

In a margin loan, a borrower secures a loan by pledging an asset and typically agrees to hand over cash if the value of the collateral declines. The lender can usually sell some of the collateral if the borrower is unable to post cash. Banks compete for these deals because of the fees associated with structured financing.

Investors have agreed to buy more than 95 percent of Deutsche Bank’s stock in the rights offer, which ends Thursday, people familiar with the matter said. About 80 percent of existing investors decided to participate in the capital increase, with some opting to boost their exposure and new investors buying the rest, said one person.

Hamad bin Jassim is returning to dealmaking as a private investor after his roles as prime minister and head of sovereign wealth fund Qatar Investment Authority. When running the wealth fund, he played a key role in Glencore International Plc’s takeover of Xstrata Plc and oversaw investments in big global banks like Barclays Plc and Credit Suisse Group AG.

— With assistance by Mohammed Sergie

(Updates with subscription details for Deutsche Bank stake sale in sixth paragraph.)
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