Deutsche Bank Needs To Show Strength, But Why Would It Need To Turn To Qatar?

According to Gadfly's Lionel Laurent, Deutsche Bank AG DB needs to demonstrate a "show of strength" to the market and a visit with Qatar's royal family could accomplish such.

Laurent noted that Qatar's royal family is Deutsche Bank's largest active shareholder and if the bank can convince the royal family to increase its stake, then it will "provide exactly that."

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There may be one obstacle standing in Deutsche Bank's way: The stock has lost more than 50 percent since in 2016, which makes it "hard to imagine any government will want to throw good money after bad."

Deutsche Bank could prove to be an exception as Laurent noted Deutsche Bank's Middle Eastern investors have shown a willingness to throw "good money" in "the face of painful losses." for instance, Qatar's royal family increased their stake in the bank in February to nearly 10 percent.

A fund controlled by Qatar's Sheikh Hamad bin Jassim bin Jabr Al Thani publicly backed Deutsche Bank's Chairman Paul Achleitner.

A further investment by the Qatari family would give Deutsche Bank some much needed "breathing room to avoid quick-fix solutions," such as selling some of its businesses. However, this time around the royal family's attitude towards the bank won't be passive.

"If Qatar doesn't step up to the plate, other investors from elsewhere could be tempted," Laurent concluded. "Angela Merkel isn't the only world leader with a stake in what happens to Deutsche Bank."