Deutsche Bank betting $4.9 billion in Las Vegas
The Local · 18 Oct 2011, 08:22
Published: 18 Oct 2011 08:22 GMT+02:00
According to an article in the Financial Times, Germany's largest bank has a $3.9 billion credit facility with the 3,000-room Cosmopolitan casino, and owns $1 billion worth of debt in Station Casinos, a firm that owns several casinos in the US gambling capital.
The bank decided to take over and complete the Cosmopolitan casino – at a cost of $4 billion - when the developer defaulted on loans from the bank.
The scale of Deutsche Bank's exposure to Las Vegas is reportedly almost the same as its exposure to Greece, Italy, Ireland, Spain and Portugal (the countries most affected by the eurozone crisis) put together.
The paper put the bank's total debts holdings in those countries at $5.1 billion, though the bank refused to comment on the figures. A spokesman did say the bank had total assets of €1,850 billion ($2,500 billion), so "you can see that we have a diversified portfolio."
Business in Las Vegas has been severely affected by the financial crisis. According to news magazine Der Spiegel, the city's turnover fell by $1 billion, or 15 percent, between 2007 and 2010, bankrupting three major casinos.
The implosion means the city now has the highest unemployment rate in the US, and was described as the "ground zero of the world economic crisis" by US think tank the Brookings Institution.
According to the Financial Times, the investments and loans make Deutsche Bank the biggest creditor in Las Vegas, though it told the paper that the Cosmopolitan was "neither a strategic nor a long-term investment."