HNA Group

China's HNA Takes Stake in Deutsche Bank

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Germany's largest bank has a new major shareholder. Source: Boris Roessler / DPA

Chinese conglomerate HNA Group, founded by billionaire chairman Chen Feng, announced on Friday it has taken a stake of 3.04 percent in Deutsche Bank and would reportedly consider buy further shares in the German lender.

The Chinese firm’s stake is worth around €750 million ($799 million) at current share prices, making it the bank’s biggest shareholder after Qatar, which has close to 10 percent of stock via two sovereign wealth funds, and U.S. asset manager BlackRock, which owns 6.1 percent. Unlike many German companies, the bank has no single dominant shareholder and a wide base of more than 500,000 investors in total. Only about 56 percent of its share capital comes from Germany.

The move will be seen as a vote of confidence in Deutsche Bank, which in September had to deflect speculation it may need a state bailout after its share price hit an historic low of under €10 per share. The bank’s shares have recovered by more than 50 percent since, in the wake of a major legal settelement with U.S. authorities in December and a general rise in bank shares since U.S. President Donald Trump’s election. Speculation has since continued that the bank may be mulling a capital increase at some point this year or next, especially if plans to sell its retail arm Postbank fall through.

Investors seemed to shrug off the news, however, as Deutsche Bank’s share price continued a steady decline over the course of Friday. It was down 3.1 percent to €17.94 by 2:40 p.m. local time in Frankfurt, making it the worst performer on Germany’s blue-chip DAX index.

“We have the fullest confidence in Deutsche Bank’s management and will keep a close watch on its future steps and lend support as a shareholder where appropriate,” a spokesman for HNA told Reuters news agency. The Chinese company said it was willing to expand its holding in future, but said it intends to keep its overall share below 10 percent.

The firm later Friday however distanced itself from the comments to Reuters, saying it was not made by a sanctioned representative. In a statement to Handelsblatt Global, HNA capital confirmed it has taken a “passive” 3.04-percent stake in the bank and added: “Any further inferences with respect to the nature of this investment or our future intentions are purely speculative.”

While Deutsche Bank has recovered from its autumn lows, CEO John Cryan has struggled to convince investors that confidence in the bank is warranted. Deutsche Bank posted another loss in 2016 of €1.4 billion after a record €6.8 billion in 2015. The bank, in the midst of a major restructuring and still facing a number of legal disputes, has said it may need until 2018 before it can reliably post profits again.

HNA is one of China’s biggest aviation, logistics and services conglomerates, controlling more than 10 companies listed on the mainland China and Hong Kong stock markets. Its interests span airlines and airports, aviation leasing and hotels and tourism. It is best known internationally for stakes in Hainan Airlines and Hilton hotels.

 

Christopher Cermak and Daniel Tost are editors for Handelsblatt Global based in Berlin. To contact the authors: cermak@handelsblatt.com and tost@handelsblatt.com

Editors note: This story was updated at 2:20 a.m. Central European Time Saturday with a clarifying statement from HNA Capital.

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