Deutsche Bank’s exposure to “casino banking” in Las Vegas has reached $4.9bn, rivalling its exposure to countries affected by the eurozone debt crisis.
The bank has become one of the biggest investors and creditors in the US gambling capital. It has a $3.9bn credit facility with the 3,000-room Cosmopolitan casino – a wholly owned subsidiary which Deutsche built when the developer defaulted on loans from the bank. It also holds $1bn of debt, and 25 per cent of the equity, in Station Casinos, which owns several casinos in the Las Vegas area.
This compares with Deutsche’s $5.1bn exposure in the countries affected by the sovereign debt crisis – Greece, Italy, Ireland, Spain and Portugal.
Owning casinos was never part of Deutsche’s strategy in Las Vegas and the bank told the Financial Times the Cosmopolitan – which cost about $4bn to build – was “neither a strategic nor a long-term investment”.
Las Vegas, described as “ground zero of the world economic crisis” by the Brookings Institution, has been badly hit by the recession and housing collapse.