Former Qatari Prime Minister Sheikh Hamad bin Jassim bin Jabr Al Thani, one of Deutsche Bank AG's key Qatari shareholders, is using a margin loan of nearly $1 billion to subscribe to the German lender's €8 billion share sale, Bloomberg News reported April 5, citing "people familiar with the matter."
Bank of America Corp. agreed to structure and finance the loan, which is backed by Deutsche Bank's stock, the sources said.
To borrow a margin loan, a borrower pledges an asset and usually agrees to pay cash if the value of the collateral drops. The lender can typically divest some of the pledged asset if the borrower fails to hand over cash.
The former prime minister and former Qatari Emir Sheikh Hamad bin Khalifa Al Thani have a combined stake of about 10% in Deutsche Bank, a level they intend to maintain, the sources added. The two were previously said to be considering increasing their combined stake.
Investors have reportedly agreed to subscribe to more than 95% of the capital increase, with nearly 80% of Deutsche Bank's existing shareholders taking part in the rights offer, which ends April 6, Bloomberg noted.