Deutsche Bank AG’s signal that it may sell a $3.5 billion stake in Huaxia Bank Co. shows the fading appetite among global lenders for tie-ups with their Chinese counterparts.
That’s a turnaround from before the global financial crisis, when Deutsche Bank, Goldman Sachs Group Inc. and Bank of America Corp. were among those buying in, often ahead of firms’ listings.
Global banks’ sales of the stakes are being driven by their need to free up capital and the Chinese banks’ diminished prospects for earnings growth. China’s caps on foreign ownership are another concern, since they limit the potential for a shareholder to increase its sway.
"Global banks are cutting their non-essential holdings or those in which they don’t have much control to focus limited resources on their core businesses,” said Richard Cao, a Shenzhen-based analyst at Guotai Junan Securities Co. “It’s not a bad move to sell because they’ve reaped the best years of China banks."
Deutsche Bank announced Wednesday it will take charges on the carrying value of a 20 percent holding in Huaxia Bank as it “no longer considers this stake to be strategic.” Speculation that a sale was imminent led to questions from analysts as early as April.
Global lenders including Bank of America and Goldman Sachs Group have raised at least $14 billion divesting shares in Chinese lenders since the start of 2012, data compiled by Bloomberg show. Hang Seng Bank Ltd., controlled by HSBC Holdings Plc, is getting out of Industrial Bank Co., while Spain’s Banco Bilbao Vizcaya Argentaria SA is exiting from China Citic Bank Corp. READ MORE OF THIS STORY ON BLOOMBERG NEWS