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UPDATE 2-Deutsche Bank to raise $11 bln with help from Qatar

* Shares fall to lowest in over a year

* New equity issue to price on June 4

* AT1 bond issue to price before May 22

(Adds detail on broader capital raising announced Sunday)

FRANKFURT, May 19 (Reuters) - Deutsche Bank said a decision to seek 8 billion euros ($11 billion) in new equity capital was driven by uncertainty about the cost of new regulations and the need for funds to expand its investment banking business.

Germany's largest bank unveiled the capital raising late on Sunday, bringing in Qatar's royal family as a major new investor. It plans to sell the new shares combined with at least 1.5 billion euros in hybrid debt by June 4.

It gives Deutsche the firepower for the investment banking push, especially in the United States, after a retreat by competitors Barclays, UBS and others left a gap that it aims to fill.

But it also underscores how the bank fell short of its ambitious turnaround targets and how burdensome fines and settlements and lagging profitability have hampered management's efforts to fortify capital by retaining earnings.

"We need some buffer to protect on the regulations," said the bank's finance chief Stefan Krause in a conference call with analysts.

In slides for an investor presentation, Deutsche said it expected the pricing of the separate, previously announced hybrid bond to come before Thursday this week, when management presents its plans to shareholders.

The so-called AT1 bond issue volume is expected to amount to at least 1.5 billion euros.

The new capital will strengthen Deutsche's regulatory ratios and give it firepower for the U.S. investment banking push and a parallel expansion in wealth management in Asia.

In a research note, Nomura analysts said the scale of the capital raising, combined with first-quarter results that fell by a third, "suggests that investors may express some caution about what may have changed to act as a catalyst".

Shares in Deutsche Bank fell 2.3 percent in early trading to their lowest since April 2013.

TOUGHENING REGULATION

The new money helps the bank bolster the capital ratios used by regulators as the European Central Bank runs the region's top banks through rigorous checks before it becomes the euro zone's leading banking watchdog in November.

A stake worth 1.75 billion euros has already been placed with an investment vehicle owned and controlled by Sheik Hamad Bin Jassim Bin Jabor Al-Thani of Qatar, Deutsche Bank said in a statement on Sunday. It plans to raise another 6.3 billion euros in a rights issue to existing shareholders.

The Qatari investor has not requested a seat on the board, nor were any special fees offered to the investor, a source close to the transaction said. "They're an investor like anyone else," he said.

Deutsche Bank said it would focus on an "accelerated growth program" by hiring top bankers in the United States, investing some 200 million euros over three years on technology improvements to its retail operations in Germany and Europe, and will hire up to 100 advisers to support its biggest corporate clients.

It also aims to expand its wealth management team in key emerging markets by 15 percent over three years. The capital measures will increase Deutsche Bank's Common Equity Tier 1 ratio, a measure of a bank's ability to withstand stress, by approximately 230 basis points, from 9.5 percent at the end of the first quarter of 2014 to 11.8 percent.

That is closer to the level already held by rivals such as UBS, which last posted a CET1 measure of 13.2 percent. Credit Suisse last posted a ratio of 10.0 percent, which is due to rise to over 16 percent due to regulatory requirements by 2019. Barclays aims for 11 percent by 2016.

The announcement of the capital hike came only four days ahead of the bank's annual general meeting, where shareholders are likely to register a mixture of displeasure and grudging acceptance over the hefty capital increase.

"Deutsche Bank's cap hike will dilute shareholders and make dividend payments per share shrink. But of course, investors have anticipated a cap hike at Deutsche Bank for a long time," said SEB fund manager Juergen Meyer.

The bank also weakened some of the reform targets it had set out in 2012 as part of a turnaround plan. A post-tax return on equity of 12 percent will come in 2016, the bank said, one year later than previously promised.

Likewise, it now says a cost-income ratio of 65 percent originally envisaged for 2015 will only come in 2016. The ratio was last measured at 77 percent at end-March.

Until now, Deutsche Bank had targeted a core tier 1 equity ratio of 10 percent under the Basel III bank rules in their most stringent form as of March 2015. It had aimed at achieving that mainly by retaining earnings. ($1 = 0.7297 Euro)

(Editing by Tom Pfeiffer)