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Deutsche Bank Top Holders Are No Longer Under German Probe

Deutsche Bank Top Holders Are No Longer Under German Probe

By Steven Arons and Nicholas Comfort Source: Bloomberg.com Bafin probed whether HNA, Qatari royal family acted in concert HNA became bank’s

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By Steven Arons and Nicholas Comfort

Source: Bloomberg.com

  • Bafin probed whether HNA, Qatari royal family acted in concert
  • HNA became bank’s largest investor after April capital raising

Germany’s financial regulator dropped a probe into whether  Deutsche Bank AG’s two largest shareholders acted in concert, according to a person briefed on the matter.

The supervisor, known as Bafin, has told Germany’s largest lender that the investigation — which was never made public — won’t be pursued further, the person said, asking not to be identified because the information is private. It had been probing allegations that Qatar’s royal family and Chinese HNA Group coordinated their investments in the lender, the person said.

A group of smaller shareholders had alleged that the investors met before the Chinese conglomerate started building its stake in the bank last year and coordinated their approach to a degree that violated German securities laws, according to two people with knowledge of the matter. Alexander Schuetz, chief executive officer of the investment company managing HNA’s stake, C-Quadrat Investment AG, and a Deutsche Bank supervisory board member, has dismissed as “complete nonsense” the allegations, reported by German media in August.

The Chinese investor may still face scrutiny by the European Central Bank which has been considering a so-called owner control procedure against HNA, according to a person familiar with the matter. Typically, the ECB would start the procedure once a shareholder’s stake exceeds 10 percent, but it can do so earlier if the investors are deemed to exert considerable influence, a person with knowledge of the matter said in July.

Ownership control procedures are conducted to see if an investor in a bank is a reliable shareholder. That can be affected by several factors, such as their reputation and any involvement in illicit activities or their financial strength, should an institution require the support of its owners.

Officials for Bafin, Deutsche Bank and HNA declined to comment, while the bank’s Qatari shareholders weren’t immediately available to comment outside office hours. The ECB declined to comment.

The Qataris started building up their stake in 2015 and have reported owning more than 6 percent between two investment vehicles. HNA first bought shares in the lender in late 2016 and became the largest investor after a capital increase in April, with a stake of 9.9 percent.

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