Station Casino’s IPO attacked by union over Deutsche Bank Libor scandal

Members of the Culinary Union protest in downtown Las Vegas. The union wants to know why Station Casinos didn’t declare Deutsche Bank’s financial missteps in last month’s IPO filing. (Image: Bill Hughes/LVR-J)

Station Casinos’ stock market ambitions were facing a challenge from Las Vegas’ most powerful union this week.

The Culinary Workers Union (Local 266) has a longstanding beef with the casino company, which is anti-union, and is attempting to derail its application for an initial public offering by drawing the financial regulator’s attention to the recent missteps of its major shareholder, Deutsche Bank.

The union has already launched a radio campaign in Nevada denouncing Deutsche Bank over its involvement with the Libor rate-rigging scandal.

The German bank was forced to pay a $2.5 billion fine following investigations by authorities in the UK and US who judged that the employees of one of its subsidiaries were guilty of manipulating Libor rates.

Libor Scandal

Libor measures the cost of inter-bank lending, setting out the average rate banks pay to borrow from one another.

If the cost of borrowing for the banks go up, the amount they charge customers for loans and mortgages does too, and its manipulation is a serious criminal offense.

Then, last week, it emerged that the bank had been hit with a $258 million penalty by US regulators for its dealings with entities subject to US sanctions in Iran and Syria.

The problem, says Local 266, is despite Deutsche Bank’s 25 percent ownership of Station Casinos, none of this is mentioned in the IPO filing.

In a letter to Securities and Exchange Commission, seen by the New York Times this week, Maya Holmes, the union’s research director said this point was “particularly disturbing.”

“We believe the S.E.C. requires a high degree of disclosure so that public investors can judge for themselves the risks associated with buying shares in an I.P.O. like Station Casinos,” she wrote.

“Parent Company of a Felon”

Deutsche Bank acquired its share in Station Casinos in 2011 when the bank agreed to hold around $1 billion of its debt as part of a two-year bankruptcy reorganization.

Since coming out of bankruptcy, Station Casinos has reported 17 consecutive quarters of cash flow growth.

Local 266, which represents around 6,000 cooks, cleaners, bartenders, cocktail waitresses, porters and other casino staff, also wants to know just how much of Station Casinos’ revenue is going into paying off Deutsche Bank’s fines and has previously complained to the Nevada Gaming Commission about the fact that the bank does not hold a Nevada gaming license.

“The Gaming Commission has always maintained a high standard when it comes to licensing casinos,” said Geoconda Arguello-Kline, Secretary-Treasurer of the union. “It is unthinkable that Deutsche Bank, the parent company of a felon, is allowed to profit from its ownership in Station Casinos without being licensed.”

Of course, Deutsche Bank is an investor, not an operator, so it doesn’t need a gaming license.

It’s also one of the world’s biggest financial institutions, which in 2014 declared assets of $1.9 trillion, which means it’s unlikely to be paying its fines out of Station Casinos’ employees wage packets.

Deutsche Bank will also act as the underwriter for the proposed IPO.