Chinese conglomerate HNA takes top stake in Deutsche Bank

HNA Group currently hold an almost 10 per cent stake in Deutsche Bank, up from the 3 per cent stake reported in February.
HNA Group currently hold an almost 10 per cent stake in Deutsche Bank, up from the 3 per cent stake reported in February. PHOTO: REUTERS

FRANKFURT (REUTERS, BLOOMBERG) - Chinese conglomerate HNA Group has become Deutsche Bank's biggest direct shareholder, upping its stake in the flagship lender of Europe's top economy to just under 10 per cent, according to a US regulatory filing.

HNA's buy, which one trader said would lift confidence in the lender's stock, leaves roughly one fifth of the struggling bank in the hands of investors who may be pursuing strategic interests.

The conglomerate initially reported a 3 per cent stake in Deutsche Bank in February, and disclosed a stake of 4.8 per cent in March, while intending to remain below 10 per cent.

The Deutsche purchase comes at a time of heightened uncertainty at the bank, as it grapples with a strategic turnaround, an uncertain global economy and the impact of Britain's departure from the European Union.

Deutsche Bank chief executive officer John Cryan is focusing his attention on returning the lender to growth after grappling with losses resulting from legal probes and misconduct charges.

Last month, the bank sold 8 billion euros (S$12.2 billion) of new shares to bolster capital after abandoning an earlier plan to sell its Postbank unit.

HNA's stake puts the Chinese firm slightly ahead of Qatari investors. Funds controlled by Qatar's former Prime Minister Sheikh Hamad bin Jassim al-Thani last year increased their stake, including options, to just under 10 per cent.

The Chinese group has been on an acquisition spree, expanding from its traditional business of aviation and logistics into financial services, betting on asset managers and consumer finance for growth at home and overseas.

Led by billionaire Chen Feng, 63, it had acquired stakes in Swiss duty-free operator Dufry, Singapore-based logistics provider CWT and hotel operator Hilton Worldwide Holdings. 

The Chinese firm was reported to have bid for HSH Nordbank, a regional bank in Germany, and earlier this year took a stake in asset manager SkyBridge Capital through

HNA Capital, which has ambitions of becoming a global investment bank and financial-services provider.

The stake in Deutsche Bank reflects a broader push by China into financial services globally as Beijing encourages its corporate sector to expand overseas, although it faces increased regulatory scrutiny in the United States and Europe.

Hefty legal penalties including for the sale of toxic US mortgage debt have hit Deutsche Bank hard and even prompted speculation last year, denied by the bank, that it needed a government bailout.

Last month it asked investors to for an 8 billion euro cash injection, the fourth such request since 2010, putting it on track to raise more than its entire market value over roughly seven years.

HNA last lifted its stake in Deutsche in March to 4.76 per cent. A regulatory filing with the US Securities and Exchange Commission said it had now increased this to 9.9 per cent.

Fund manager BlackRock owns 6.1 per cent.