Slimming Down Sources: Deutsche Bank To Sell Stake in China’s Hua Xia Bank

Deutsche Bank plans to sell its stake in China’s Hua Xia Bank and exit retail banking in India, Handelsblatt has learned. The sale of its stake in China could bring in more than €3 billion.
Deutsche Bank is leaning away from China.

Deutsche Bank plans to sell its stake in China’s Hua Xia Bank, according to two people familiar with the matter, potentially bringing in more than €3 billion, or $3.3 billion, in cash as Germany’s largest bank exits commercial banking outside of Europe and looks to refocus on the divisions that are the most profitable.

Also part of Deutsche Bank’s plan is to close its retail banking operations in India, Handelsblatt has learned. The move is part of a drastic exit from retail banking that includes selling German retail arm Postbank and closing operations in six other smaller countries.

Outside of Germany, Deutsche Bank would be left with retail banking operations in only a select few European countries: Belgium, Italy, Spain, Portugal and Poland.

Deutsche Bank has held a minority stake in China’s Hua Xia Bank since 2006 and last raised its stake to almost 20 percent in 2010. The German bank paid €1.3 billion initially  but the rising share value of the Chinese bank has raised the value of the shareholding to €3.3 billion.

A final, formal decision on the sale has not yet been taken, sources said.

Deutsche Bank would not comment on this information. But a spokesperson noted Deutsche Bank’s new chief executive, John Cryan, would be announcing the details of the bank’s latest strategic overhaul, dubbed “Strategy 2020,” by the end of October.

Exiting China and India would help Deutsche Bank meet tougher new capital requirements from regulators, but  the bank may still struggle to sell its stake in the Chinese bank. Financial insiders say the recent currency and stock turbulence in China could scare away potential buyers.

 

Laura de la Motte covers banks and finance for Handelsblatt in Frankfurt. To contact the author: [email protected]

Read further details of this story in Wednesday's edition of the Handelsblatt Global Edition.