The Deutsche Bank (DBKGn) announced that the bank will sell its 20% share in Hua Xia Bank (SHA:60015) in a deal worth up to $4 billion. The stake in the company will be sold to PICC Property and Casualty Co (HKG:2328). Following the announcement, PICC Property & Casualty fell 1.48%.
The sale comes at a time when many Western financial institutions are cutting back on owning China subsidies. Caps placed on foreign ownership of companies have been a difficult for many financial institutions to experience growth in China and Asian-based companies.
The reduction of the company stake in Xia Bank is expected to be profitable. The company is expected to make significantly more money in 2015 due to much higher stock prices. The company stock is currently trading at 11.44 yuan, but was sold to Deutsche Bank at less than 4 yuan a share in 2006.
A departure from Hua Xia does not mean that the German bank will not have a foothold in China. The bank will still maintain its securities joint venture and asset management business in mainland China. The sale is expected to increase the bank’s common equity tier 1 capital by 0.3% to 0.4% points. The company also announced that they will be cutting 15,000 jobs and will suspend dividends for two years.