Deutsche Bank to raise up to $4 bn from Hua Xia Bank stake sale
29 December 2015
Deutsche Bank AG has struck a deal to sell its 20-per cent stake in Hua Xia Bank Co to PICC Property and Casualty Co.
The sale is expected to generate 25.7 billion yuan ($4 billion), Frankfurt-based Deutsche Bank said in a statement yesterday.
It said the deal would add 30 to 40 basis points to Deutsche Bank's 11.5 per cent common equity Tier 1 ratio, using 30 September as a basis, according to the company.
Cryan, after taking over from Anshu Jain as CEO in July, is looking to sell assets and cut bonuses to help increase the company's financial strength without tapping shareholders for funds.
Deutsche Bank follows competitors Banco Bilbao Vizcaya Argentaria SA, Goldman Sachs Group Inc and Bank of America Corp in selling holdings in Chinese financial institutions with as new international rules make it expensive to hold minority stakes in lenders.
''It's good that this is done, but it's a small step in a long journey and this isn't going to propel them forward,'' Christian Hamann, an analyst at Hamburger Sparkasse who has a neutral recommendation on Deutsche Bank shares told Bloomberg.
''It was clear they couldn't do much with a minority stake. The price suggests they won't have to take any more losses on the stake.''
Deutsche Bank, Hua Xia Bank's largest shareholder, had progressively built up its holdings in the mid-sized Chinese bank since first taking up a stake in 2006.
The German bank is one among several foreign financial institutions to have sold or seeking to sell shares in Chinese banks after stricter banking regulations made it costlier to hold minority stakes in other banks.
Shares of Beijing-based Hua Xia Bank surged 3 per cent on the news to trade at around yuan 11.79 a share this morning.
Chinese insurers had been busy over the last few weeks, signing deals. Earlier this month, acquiring a 5 per cent stake in China Vanke, Forsea Life Insurance overtook China Resources as the property developer's largest shareholder.