Is China about to become the largest shareholder of Deutsche Bank? A scenario that may be a cause for concern in Berlin seems more probable than ever after the regulator's recent action.
HNA Group in recent years was one of China's most active investors and bought almost 10 percent of Deutsche Bank, one of Germany's major banking corporations. The Chinese conglomerate led by Chen Feng borrowed vast amounts of money to finance the acquisitions and also applied other, less traditional financing methods, to cover the buying binge.
The recent moves by Chen Feng, reducing his stake in Deutsche in two steps to a current 8.8 percent, has had the alarm bells ringing though and prompted concern that HNA is in more trouble.
Chinese Moves
Add to that the move by Chinese officials against rival conglomerates, and the worries of Germany's banking community about a new strong state actor as the largest owner in Deutsche may come true.
Chinese officials recently removed Wu Xiaohui, the founder and chairman of finance conglomerate Anbang, from his post. The step was an indication of how the country is trying to protect itself against the outfall of speculative financial dealings of its voracious conglomerates, finews.asia recently reported.
More to Come?
With the regulator breathing down their necks, Chinese conglomerates may look to pare their stakes abroad, and HNA's divestment in Germany may have been the first of a series of steps, with other high profile international purchases set to be reviewed.
HNA bought itself some wriggle room by dumping properties in Australia and Hong Kong and agreed to a deal with Citic Bank in Beijing that provided the firm with a cash injection.
Warning Shot
And in that light, the action taken by China's regulators, presumably supported by the central government, in taking on Anbang, is a warning shot to the debt soaked conglomerates and one Deutsche Chief Executive John Cryan will be watching with unease.
