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Deutsche receives 'substantial' offers

by Andrew Bulkeley in Berlin  |  Published February 15, 2012 at 11:23 AM
Deutsche-Bank-227x128.jpgDeutsche Bank AG has received just under 10 offers for the institutional asset management business it is looking to unload to raise capital and remove a division that lacks the bulk to compete.

Germany's biggest bank, based in Frankfurt, has received "substantial" offers for both the entire unit and parts of the division, a source familiar with the auction said.

The sale is part of Deutsche's efforts to raise cash and lower exposures as the European Banking Authority institutes new regulations requiring banks to have Tier 1 capital ratios of 9% by July. Deutsche has already crested the threshold, removing any immediate pressure, but analysts have warned that weaker-than-expected earnings as well as new Basel III requirements in 2019 may require additional funds.

The sale could bring in as much as €2 billion ($2.64 billion), according to German daily Handelsblatt. Deutsche is expected to narrow the list of bidders this month, and analysts said it wouldn't be interested in selling it off piecemeal. A final sale could be struck by the summer.

The activities on the block have about €500 billion in assets under management and include its DB Advisors institutional business, its Deutsche Insurance Asset Management activities and its RREEF real estate investment venture. The businesses employ about 1,500 people.

Its DWS Investments fund management unit in Europe and Asia are not included in the sale.

Ameriprise Financial Inc. of Minneapolis, Macquarie Group Ltd. of Sydney, Australia, Guggenheim Partners LLC of New York and Chicago, and State Street Corp. of Boston remain in the auction, according to Handelsblatt.

Deutsche shares pared 1.9%, or €0.65, to €32.99, Tuesday amid reports the company had reached a settlement in a decade-old battle over the insolvency of the Leo Kirch media empire.

Deutsche has reportedly agreed to pay Kirch's heirs and creditors of KirchMedia GmbH & Co. KGaA a total €800 million to end the suit -- a figure much higher than analysts had expected.

Kirch, who died last year, accused former Deutsche CEO Rolf Breuer of ushering in the bankruptcy by saying in a television interview that no one would lend Kirch's media businesses any additional funds because of its difficulties.

Kirch had invested heavily in the perennially money-losing Premiere digital TV service now known as Sky Deutschland AG.

Analysts said the bank may be trying to make amends before its well-known CEO, Josef Ackermann, steps down in May. He will be replaced by Anshu Jain, head of Deutsche's investment bank, and Jürgen Fitschen, head of the company's German operations.

Deutsche refused to comment on either the asset management sale or the Kirch settlement.
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Tags: Banking | Deutsche Bank AG | Europe | Germany

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