Deutsche Bank Stops Sponsoring H.K. IPOs on Staffing Lapse


Deutsche Bank AG will be unable to sponsor initial public offerings in Hong Kong as the German lender failed to replace the staff needed by regulators in one of the world’s biggest markets for share sales.

The bank has hired replacements who will start in a matter of weeks and will be able to resume its sponsor roles when the principals are on board, a Hong Kong-based spokeswoman said. The news was earlier reported by the Financial Times.

The hiccup comes as the bank attempts to rebuild its equity capital markets business in Asia after it shuttered most of that businesses and cut 18,000 jobs globally. While the bank has plans to hire a dozen bankers for the business, seeking to tap strong demand for share sales, it has only acted as a sponsor for a $170 million deal in Hong Kong since its equities exit in July 2019, according to data compiled by Bloomberg.

The issue suggests there were poor internal controls at Deutsche Bank, a person close to the Securities and Futures Commission, Hong Kong’s financial regulator, told the FT. The lender also needs approval from the SFC, which could be a slow process, the newspaper said. It will still be able to underwrite IPOs until its sponsor license is renewed.

A sponsor, the most prominent role in an IPO, must have at least two principals in order to carry out the activity. One of them must have at least five years of corporate finance experience in Hong Kong and played a substantial role in previous sponsorship.

A spokesman at the SFC declined to comment when reached by Bloomberg News.

“It shouldn’t take too long for the SFC to approve a new IPO sponsor principal in general, given that the person’s credential fits and satisfies the regulator and there are no outstanding issues regarding the company or the person,” said Josephine Chung, a director at CompliancePlus Consulting, who advises on license applications.

Poon Tsz Yuen, a responsible officer at Deutsche Bank, resigned recently, the spokeswoman said. Rowena Wang, a former responsible officer at the German bank, had her license terminated on June 16, according to the SFC website.

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