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Deutsche Bank shelves $4.6-bn India portfolio sale to IndusInd: Sources

George Smith Alexander, Anto Antony and Steven Aro/Frankfurt 17 Apr 18 | 08:47 PM

Deutsche Bank AG called off talks to sell its retail and private wealth businesses in India to IndusInd Bank Ltd., people with knowledge of the matter said.

The sale was a project initiated under former Chief Executive Officer John Cryan, and Deutsche Bank is reconsidering the deal following his departure earlier this month, the people said, asking not to be identified because the information is private. The two businesses have about 300 billion rupees ($4.6 billion) in assets, according to one of the people.

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The bank’s new CEO, Christian Sewing, and retail head Frank Strauss decided that Deutsche Bank didn’t get a price that justified selling the profitable unit, the people said. The lender has instead decided to keep the assets and is now considering increasing its investment in India, several people said. In January, Bloomberg News reported Deutsche Bank planned to sell the units, part of a move to refocus on its home market.

“Assuming the unit is profitable, it makes sense for Deutsche Bank to keep it and maintain its presence in Asia," Andreas Plaesier, an analyst at M.M. Warburg with a hold recommendation on the stock, said by phone. “Sewing was probably already planning to stop the sale when he was appointed CEO, and it’s, therefore, unlikely to affect his target" of keeping adjusted costs below 23 billion euros ($28.5 billion) in 2018, he said.

In a statement when he was appointed earlier in April, Sewing said that Deutsche Bank must regain its “hunger for business" to achieve its revenue targets this year. The leadership change has prompted scrutiny from S&P Global Ratings, which said it may downgrade the bank’s credit rating if it’s affected by a “prolonged, deepened or more costly restructuring."

Deutsche Bank hasn’t made any final decisions on its future India strategy, one of the people said. A Hong Kong-based spokeswoman for Deutsche Bank declined to comment. A representative for Mumbai-based IndusInd Bank said she couldn’t immediately comment.

Asia’s No. 3 economy is the only country outside Europe where Deutsche Bank has retail operations. It employs more than 12,400 people in India.

Income before taxes from the India business stood at 305 million euros in 2017, putting the country among Deutsche Bank’s top four income-generating regions, including Germany and Singapore, filings show. The bank has a credit exposure of about 15.2 billion euros in India, its second-highest among Asia-Pacific markets after Japan.

Deutsche Bank, which started operations in India in 1980, has previously divested parts of its business in the country. In 2010 it sold its mortgage business, and five years later it offloaded its local asset management unit.

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