Oppenheim Opens Its Doors – US-FOREX.US
German financier Salomon Oppenheim, Jr. would be turning in his grave. The private bank he founded 220 years ago, Sal. Oppenheim & Cie., has opened its books for the first time in more than a century to an outside investor-Germany’s Deutsche Bank. The “strategic partnership” being discussed could lead to Deutsche Bank taking a minority stake, but the last time Deutsche took a minority stake-in retail lender Deutsche Postbank-it promised to subsequently take full control.Sources familiar with Sal. Oppenheim’s strategy played down the possibility of allowing anything more than a “minority stake,” arguing that Deutsche Bank wouldn’t want to sacrifice the private bank’s family ownership and close ties with customers. But it’s clear that Luxembourg-based Oppenheim is under pressure and in need of capital, so even though it is an attractive asset that won’t sell itself cheap, the scales seem to be tipped in Deutsche Bank’s favor. How could this happen? Although Oppenheim’s stronghold in asset management seems to have helped it avoid the worst of the banking sector’s toxic debt losses, the financial crisis did hurt its investment banking division and led to a net loss in 2008 of 168.6 million. The bank’s family shareholders clubbed together in December and poured in 200 million euros to help fill the cracks in the balance sheet; at the end of last year, Oppenheim had 1.9 billion euros in equity and a regulatory capital ratio of 12%.But the real “black swan” event for Oppenheim was the collapse of German tourism-and-retail conglomerate Arcandor in June. Oppenheim had taken a 30% stake in the company last September, in a bid to support one of its clients, billionaire Madeleine Schickedanz, who owns around 25% of Arcandor. Although Oppenheim did sell 4% of this stake after Arcandor’s collapse, leaving the rest in the lap of its family shareholders, it suffered a book loss of around 43 million.So with Oppenheim’s owners’ capital health damaged by their 26% ownership of a bankrupt company, and Fitch Ratings’ subsequent downgrade of the bank’s credit rating, to A minus, from A, there were few options left on the table. Sources say BNP Paribas
and Credit Suisse
were interested in Oppenheim, but Deutsche Bank
seems to have won the day.Sources close to the bank think there could be a positive future with a big investor in tow, such as more international opportunities outside of the German-speaking world. But Oppenheim’s situation is not of its own making, and the talks will likely be tinged with more than a hint of regret.