Losing Saudi Arabia

Choppy Waters for Deutsche Bank

SaudiArabia-Banks-GettyImages
A potential deal with Saudi Arabia's Aramco could provide a massive boost to Deutsche Bank – but would also come with more political headaches.
  • Why it matters

    Why it matters

    Deutsche Bank hopes Middle Eastern politics will not derail lucrative business, as the last of the LIBOR scandal plays out in British courts.

  • Facts

    Facts

    • The Saudi national oil company Aramco may be partially floated. It is thought to worth a possible $10 trillion.
    • Unlike some competitors, Deutsche Bank has a profitable Saudi subsidiary.
    • In April 2015, Deutsche Bank paid a total of $2.5 billion in fines in connection with benchmark interest rate fixing.
  • Audio

    Audio

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One recent piece of banking news has had an electrifying effect in global financial circles.

Saudi Arabia was said to be considering floating part of Aramco, the state-owned national oil producer, on the stock exchange. If it were to happen, this could be the biggest deal of all time. Analysts estimate Aramco’s value at anything up to $10 trillion.

Even if only a fraction of that figure were to come to market, it would still be a dream deal for any investment banker. No wonder speculation has already begun as to which bank might underwrite the prestigious flotation, should it take place. News agency Bloomberg reported at the weekend that, alongside JP Morgan and HSBC, Deutsche Bank also had hopes of winning the commission.

Such is the predicament of Deutsche Bank these days, however, that even good news seems to turn to bad. Taking the Aramco deal has turned from a financial bonanza into a very tricky job, given increasing international criticism of Saudi Arabia in the wake of the mass execution it carried out at the beginning of the year.

The questionable deal comes as Deutsche Bank has been working hard to improve its reputation since new co-chief executive John Cryan took the helm in July, despite a raft of legal investigations that continue to dog the bank. Included among these is a trial set to begin in London against employees involved in the LIBOR rate-fixing scandal, it was announced Monday.

Deutsche Bank is also desperate for new sources of revenue. A deal with Saudi Arabia would mark a major boost to Deutsche Bank’s business at a time Mr. Cryan is demanding deep cutbacks to the bank’s global operations.

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