Sunday, May 18, 2014

Deutsche Bank in trouble again ? May 18 , 2014 News of note --- Deutsche Bank Scrambles To Raise Capital: Will Sell €8 Billion In Stock At Up To 30% Discount ..... This follows selling a Vegas casino and the exit of gold price fixing ........

Deutsche Bank Scrambles To Raise Capital: Will Sell €8 Billion In Stock At Up To 30% Discount

Tyler Durden's picture

Remember this?

This is a chart we have been presenting since last year, updated periodically, showing just how vast Deutsche Bank's potential undercapitalization is/would beif, as in the case of Lehman, for some reason gross exposure suddenly becamenet, and there was counterparty failure. It is also the reason why we predicted as recently as last month when Deutsche announced it would issue another €1.5 billion in Tier 1 capital, that the German megabank's capital raising is far from over.
Sure enough, just out from Bloomberg:
  • Deutsche Bank preparing a capital increase, aims to raise EU8 billion through new shares by end of June, Handelsblatt says, citing unidentified people in the finance industry.
  • Deutsche Bank likely to get new single investor
  • Negotiations ongoing, haven’t been made final
  • Deutsche Bank declined to comment: Handelsblatt
Who will buy the shares?
  • Deutsche Bank new investor may hold 5%-8% of shares
Belgium? WSJ adds:
The planned capital increase will consist of Deutsche Bank issuing a total of 360 million new shares, the person said.A single strategic investor has agreed to buy 60 million of the shares with the remainder sold to investors via a so-called rights offering, this person said.The rights offering is fully underwritten, meaning investment banks have agreed to buy any shares that investors don't purchase.
And the punchline: Bank’s new shares may be sold with 25%-30% discount.
In other words, it is liquidity scramble time, and the bank is willing to give anyone with deep enough pockets a 30% discount to market price just to get some additional short-term funding.
Why the scramble, especially if Europe is, as eurocratslying central bankers and conflicted pseudo-intellectuals like to claim "fixed?" We can't wait to find out although something tells us that the official version, that "the move is expected to boost a key gauge of the bank's
financial strength, its core Tier 1 level, to at least 11.5% of its
risk-adjusted assets, compared with 9.5% now" is merely the latest lie out of a continent where contrary to intentions, the ECB's annual stress test confirms banks are in worse shape than ever. Which, as Marathon CEO Bruce Richards, who during the SALT Las Vegas conference last weekestimated European banks' equity shortfall to be around $800 billion, is perfectly understandable.
Source: Handelsblatt

Deutsche Bank sells Vegas casino for $1.73 billion

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LAS VEGAS — Deutsche Bank AG is cutting itself free of The Cosmopolitan of Las Vegas resort and casino, saying it's selling the swanky but unprofitable high-rise complex on the Strip to Blackstone Real Estate Partners VII for $1.73 billion.
The German investment bank said in a statement Thursday that the cash deal remains subject to regulatory approvals. The bank had intended to sell the property from before it even opened in 2010 and had placed The Cosmopolitan in a separate bank division devoted to winding down or selling unwanted investments.
Blackstone, which owns $81 billion in real estate assets globally and describes itself as the largest opportunistic real estate investment manager in the world, is in the business of buying underperforming property and re-selling it after making improvements. It owns nearly 1,000 homes in Nevada and the upscale Hughes Center office complex in Las Vegas, as well as a small portion of casino company Caesars Entertainment Corp.
"Blackstone recognizes the value and potential in the Cosmopolitan and Las Vegas, and looks forward to working to build on the success to date," Tyler Henritze, the company's senior managing director, said in a statement.
The last major Las Vegas resort approved before the Great Recession, the $3.9 billion Cosmopolitan, was built by Deutsche Bank AG after its original developer defaulted on a loan. Initially conceived as a condo complex, it retains large rooms and kitchenettes even though the project morphed into a hotel after the housing market crashed.
The Cosmopolitan has branded itself as a "decidedly different" kind of casino, eschewing the kitschy themes common among its competitors and catering to a more urbane kind of gambler and club-goer with the tagline "just the right amount of wrong."
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The casino is home to Marquee, one of the top-grossing nightclubs in the United States, and features a three-story bar enveloped by a giant chandelier.
But its emphasis on entertainment and celebrity-chef-run restaurants over gambling, and a smaller database of regular gamblers than its casino chain competitors, hit the resort's bottom line.
"Optimally you want to use the food and beverage as a driver for gambling," said David G. Schwartz, director of the Center for Gaming Research at the University of Nevada, Las Vegas. "They've definitely struggled to establish an identity as a gaming destination on the Strip."
While gambling revenues citywide remain lackluster, tourism overall is on the rebound and hotel rooms are commanding higher rates. In March, the city's average daily room rate rose 21 percent from a year earlier, according to tourism officials.
"Hotels are hot again across the board," said Leo Leyva, an attorney at the firm Cole Schotz who advises private equity firms on acquisitions and who wasn't involved in the Blackstone deal. "Deutsche was strong enough not to just dump it in the worst market. They've waited for the market to move. Hotels are now an investment that's rising."
Officials at the resort said they were "genuinely excited" to hear about the sale.
"This marks the beginning of the next chapter for The Cosmopolitan of Las Vegas and the thousands of dedicated CoStars who are committed to providing a compelling guest experience," CEO John Unwin said. "It is a testament to our unique approach to the Las Vegas market."
The Culinary Workers Union, which represents 2,000 workers at the Cosmopolitan, called on the company to retain all employees after the sale, and asked it to reach a contract with the union. The group has picketed the casino in the past.

German Gold Manipulation Blowback Escalates: Deutsche Bank Exits Gold Price Fixing

Tyler Durden's picture

Germany's blowback against gold manipulation is accelerating. Following yesterday's report that Bafin took a hard line against precious metals manipulation, after its president Eike Koenig said possible manipulation of precious metals"is worse than the Libor-rigging scandal", today the response has trickled down to Germany and Europe's largest bank, Deutsche Bank, which announced that it would withdraw from the appropriately named gold and silver price "fixing", as European regulators investigate suspected manipulation of precious metals prices by banks. As a reminder, Deutsche is one of five banks involved in the twice-daily gold fix for global price setting and said it was quitting the process after withdrawing from the bulk of its commodities business. The scramble away from gold fixing was certainly assisted by the recent first (of many) manipulation expose in the legacy media, when Bloomberg revealed "How Gold Price Is Manipulated During The "London Fix." And sure enough, with Germany already very sensitive to the topic of its gold repatriation, and specifically why it is taking so long, it was only a matter of time before any German involvement in gold manipulation escalated to the very top.
"Deutsche Bank is withdrawing its participation in the gold and silver benchmark setting process following the significant scaling back of our commodities business. We remain fully committed to our precious metals business," it said in a statement.

In mid-December, German banking regulator Bafin demanded documents from Deutsche Bank under an inquiry into suspected manipulation of benchmark gold and silver prices by banks, the Financial Times reported, citing sources.

Bafin declined to comment on Friday, but its President Elke Koenig said the previous day that it was understandable that the topic was attracting widespread concern.

"These allegations (about currencies and precious metals) are particularly serious, because such reference values are based - unlike LIBOR and Euribor - typically on real transactions in liquid markets and not on estimates of the banks," she said in a speech
Needless to say, manipulation of the gold market would not be exactly novel to a bank which has also been named in cases related to the sub-prime crisis, credit default swaps, mortgages, tax evasion and a decade-old lawsuit suit brought by the heirs of late media mogul Leo Kirch, who accuse the bank of undermining the business.
Reuters also reports that Deutsche is now actively marketing its gold and silver fixing seats to another LBMA member, however now that the cat is out of the bag on the gold fixing manipulation scheme (the first of many), it is likely that others will seek to follow in Deutsche's footsteps and seek to put as much distance between themselves and the wood-paneled room once located in the Rothschild office on St. Swithin's Lane in London.
We wonder which of these five gentlemen is from Deutsche?
So if everyone exits the London fixing market, what happens then?
"It wouldn't surprise me if the other banks were looking at pulling out as well. Why would they want the aggravation?" said the source, who declined to be named.

"The more worrying point is that, if you don't have the fixing, what do you have? There's a lot of contractual business done on the gold fix, and if you've got no basis for where the price is, someone is going to lose out."
Well considering that the fixing process over the years was manipulation pure and simple, those who will lose out are the... manipulators? it would seem rather logical. And speaking of manipulation, if indeed Germany is so keen on breaking the manipulators' back, perhaps it can demand that the pace of its gold returns from the NY Fed and Paris accelerates. It may be surprised at what it finds.