Following a worldwide examination of its operations, Deutsche Bank‘s retail division, which has loan assets of between Rs 25,000 and Rs 30,000 crore, is for sale.
Sources claim that at least three of the four private banks solicited for the sale have not yet shown a great deal of interest.
Deutsche Bank Exits India
Deutsche Bank seems to be following Citibank‘s decision to discontinue its retail operations in India, some four years after Citibank took that choice. As part of its global strategy, Deutsche Bank has decided to stop its retail operations in India, according to senior bankers who spoke to Moneycontrol on condition of anonymity.
According to one of the bankers mentioned above, the top four Indian private banks received an invitation for a non-binding offer last Friday, August 29. The reaction seems to be very subdued for the time being.
Potential Sale Sparks Concerns
At least the big three private banks do not seem to be very interested in the proposal, but it is too soon to tell,” he said.
The sale of the retail business in India would include the wealth management company, retail assets, and retail liabilities. Another consequence of the eventual sale of Deutsche Bank India’s retail sector would be the layoff of 1,300 employees and 17 outlets.
An official spokeswoman for Deutsche Bank India responded to a question from Moneycontrol asking for clarification on the subject by saying, “We do not comment on rumors or market speculation.”
Retail Sale Faces Limited Interest
Although Deutsche Bank’s wealth division is estimated to be worth USD 2 billion (about Rs 15,000 to 16,000 crore), the company’s Indian retail assets, valued at around Rs 25,000 to 30,000 crore, are not thought to have the critical mass to draw in many bidders.
According to reports, a significant portion of retail loans in India are really secured by real estate.
The strength of the liability franchise comes from the corporate book. It may be a fair offer for a buyer to express interest in it in addition to the wealth management company,” a private bank CEO said.
Recent Investment Sparks Questions
The German parent company of Deutsche Bank invested Rs 5,113 crore in the Indian division in November of last year, making it one of the bank’s biggest capital allocation plans in recent memory.
Another banker said, “Given this backdrop, it is unclear why Deutsche Bank AG opted to put the Indian retail business on the sale in less than a year after infusing capital,” but others speculate that the objective may have been to reduce losses.