by MARTIN HESSE & CHRISTIAN REIERMANN
Qatar’s ruler Sheikh Tamim bin Hamad Al Thani with U.S. Secretary of State John Kerry, 25 September 2014 PHOTO/Wikipedia
It was Anshu Jain himself who arranged the deal in May 2014 with Sheikh Hamad bin Jassim bin Jabor al-Thani of Qatar. The two knew each other, of course – the former co-CEO of Deutsche Bank and the ex-Qatari prime minister, also known by his initials HBJ, who is one of the richest and most influential men in the Gulf region. HBJ had long been a valued Deutsche Bank customer before discreetly negotiating a deal with Jain that saw him invest 1.75 billion euros in the bank, making him one of the Frankfurt-based financial institution’s major shareholders.
Jain celebrated the coup, because it appeared that Deutsche Bank had gained a strong partner who could help pave the way to better times for the bank. A partner who explicitly supported Jain’s strategy of establishing the company as the last globally important European investment bank. The German government also favored the development.
But just two and a half years later, the bank is at the edge of the abyss. Jain was deposed from his position as a result of his role in the financial crisis and because of his limited success as co-CEO. His successor John Cryan, who has now been at the helm for 15 months, has also failed to come up with a coherent strategy, the bank’s capital is tight once again and distrust among shareholders and customers alike is growing.
On September 15, the Justice Department in the United States ordered the company to pay a $14 billion fine to settle accusations of fraud in Deutsche Bank’s packaging and sale of mortgage-backed securities in the free-wheeling days that led to the global financial crisis. Speculators and politicians have been in a state of near panic since the announcement, with open speculation about the possibility of a government bailout for the prestigious bank. An atmosphere of frustration and depression is currently prevailing inside the bank and Cryan is trying to combat it with messages of perseverance.
For a time, Deutsche Bank’s market value plummeted below 15 billion euros, down from 35 billion a year ago. Large-scale investor HBJ and his cousin – the former Emir of Qatar, Sheik Hamad bin Khalifa al-Thani, who he has since brought in as an investor as well — are believed to have lost more than a billion euros – on paper, at least. This summer, the two increased their holdings to just under 10 percent of the company, but Deutsche Bank’s market capital has since continued to slide.
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