BaFin Halts German Private Bank Sale

by Ulrika Lomas, Tax-News.com, Brussels

22 April 2011

Deutsche Bank and Liechtenstein Bank LGT said on April 18 that they had abandoned talks towards the latter's acquisition of Frankfurt-based BHF-bank, Deutsche Bank’s private banking and wealth management subsidiary.

Despite having been in exclusive talks since December 2010, and with a sale agreement already drawn up and ready to sign, it is believed that the German financial regulator BaFin pulled the plug on the deal because LGT did not meet the standards required to acquire a German financial institution under German law.

In a brief statement, LGT said that following discussions with the appropriate regulatory authorities LGT had decided not to pursue the complex transaction.

Deutsche Bank said:

“Deutsche Bank regrets the fact that the transaction did not come about. In order to give clients and staff of BHF-BANK certainty right away about further developments, and to offer them clear and sustainable long-term prospects, the Management Board of Deutsche Bank has decided not to continue the process of selling BHF-BANK.”

“Rather, the bank will implement its alternative plan and continue the successfully launched process of transforming and modernising the business operations of BHF-BANK within Deutsche Bank Group.”

LGT was previously subject to a tax-related investigation by German regulators wherein the bank paid a EUR50m settlement, without judgment being made over the legality of LGT's operations.

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