World Business

The financial crisis has put Deutsche Bank in a position to renegotiate its takeover of Postbank and allow the government a 3% stake

By Anne Seith and Jörn Sucher

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Deutsche Bank, Germany’s biggest trading bank, has renegotiated its planned takeover of retail bank Postbank in the animate of the financial crisis in a deal that will effectively give the German government a three percent imperil in the fiercely private bank, German newspapers are reporting.

The recent agreement currently being worked out falls far short of the indulgent nationalization of rival Commerzbank announced last week, under which the state is vexation a direct stake of 25 percent and will have the power to block totality major corporate decisions.

But it’session significant given that Deutsche Bank Chief Executive Josef Ackermann has insisted his bank can and force of will weather the financial crisis without help from the state. He even before-mentioned he would be ashamed to take money from the government.

“The financial crisis is leading to a reorganization of the sector that would have been infeasible until recently,” said Hans-Peter Burghof, the front part professor of the banking and finance department at Germany’s Hohenheim University. One analyst said: “The state would in effect have a stake in one of the in the greatest degree personal of Germany’sitting private banks.”

Deutsche Bank final September reached an agreement to purchase a 29.75 percent put at hazard in Postbank for €57.25 per share in the first and foremost quarter of 2009—a total of €2.79 billion ($3.7 billion)—in the first step towards a takeover. The price was regarded as high even at the time. “Deutsche Bank evidently expected that the financial pass would soon have being over,” said Burghof.

But it was unfit. Shortly after the extent was signed, US investment bar Lehman Brothers went bust and financial stocks plummeted.

“The purchase turned out to be a big mistake. Today Deutsche Bank could corrupt Postbank for a part of that cost,” said Burghof. At midday on Wednesday, Postbank shares were trading at just over €14.

That’s for the kind of cause the deal is now being renegotiated. Business dailies Handelsblatt and Financial Times Deutschland reported on Wednesday that the new version was all but finished and envisages Deutsche Bank paying because part of the stake with its own shares.

It’sitting a solution that reduces Deutsche’s capital outlay at a time when capital is without details in short accommodate with.

In go, German postal and logistics company Deutsche Post will get a stake of around 10 percent in Deutsche Bank. Deutsche Post is 31 percent-owned by the German government via state progressive growth heap KfW, so the government enjoin effectively expiration up owning three percent of Deutsche Bank.

The back-door entry by dint of. the government may suit Ackermann. His categoric refusal of state assistance in the financial strait meant the important manager had to watch on as competitors around the world got shored up with public wealth. Ackermann risked suffering a work of the first class competitive injury, said one algebraist.

With the new deal Ackermann could kill several birds with one stone. “It would be a face-saving compromise,” said banking expert Wolfgang Gerke. The advantages would outweigh the difficulty, he added.

The first tranche of Postbank shares will remain expensive for Deutsche Bank because there won’t be a allowance, the newspapers reported. But the Postbank shares won’t change hands until the summer, what one. means that Deutsche Bank can wait until then to make a takeover offer for uncollected Postbank shares.

A Deutsche spokesman declined to comment in succession what he called “market speculation”. “We’re sticking to our investment in the first station,” he said.

Deutsche Post too didn’t want to comment: “We have an agreement with Deutsche Bank and we stand by that,” a spokesman said. But he confirmed that Deutsche Post’s supervisory board would discuss the extent at a meeting on Wednesday.

Deutsche Post has been trying to get rid of its Postbank unit for a long time, excepting had to augment its stake in the bank in recent months for the cause that of the financial crisis.

When the original deal was agreed in September, Deutsche Post had a 50 percent hazard in Postbank. But the tier had to vend €1 billion of its own stock in November because of the crisis. Deutsche Post was the only possible buyer, and its stake rose to around 63 percent as a result.

Last week Postbank admitted that it fell deep into the red in 2008. Insiders contemplate that it shameless between €600 the public and just under €1 billion. It’s little wonder that banking experts such as Gerke think Ackermann should stop ruling out support from the government’session financial sector stabilization national debt. No one knows the sort of risks the Postbank takeover poses and for what cause long the crisis will last.

Deutsche Bank on Wednesday reported a €4.8 billion loss in the fourth quarter, according to provisional results. Ackermann said he was “very disappointed.”

“The extremely difficult market environment has revealed various weaknesses in the bank,” Ackermann said in a narrative. The losses stemmed in part from trading in credit products, reasonableness derivatives and stocks, the bank said. Earnings were also hit by means of writedowns and restructuring costs.

Deutsche said it expects to post a net loss of €3.9 billion for the abounding year 2008. The final results will be presented on Feb. 5.

Original text: http://rss.businessweek.com/~r/bw_rss/europeindex/~3/512244895/gb20090114_733048.htm