Deutsche Bank Said to Seek China License in Move to Boost Ties

(Bloomberg) -- Deutsche Bank AG has applied with Chinese regulators for a license to help foreign companies get access to the Asian nation’s capital market, part of an effort to expand its business in the region, according to people briefed on the matter.

The application was made through what is known as the Chinese Depositary Receipts program. German Finance Minister Olaf Scholz and his deputy, Joerg Kukies, talked with Chinese leaders during a recent trip about improving access for Deutsche Bank to the country’s capital markets, said the people who asked not to be identified because the deliberations are private.

Representatives for Deutsche Bank and the German government declined to comment. The China Securities Regulatory Commission didn’t immediately respond to a request for comment.

China has been trying to get the CDR program off the ground since last year, which would allow companies’ shares to be traded on its exchanges without a listing. While the effort has struggled to gain traction, seeking a license could be one way for Deutsche Bank to bolster its standing in the country if China manages to revive interest in it.

Stalled Program

When CDRs were first mooted in February last year -- just as the country’s stock market began its months-long slide into a bear market -- there was initially great interest. China had hoped it would lure back some of its brightest companies that had opted to list in less restrictive markets offshore. But the process has been far from smooth, and the effort suffered a major blow in June when Xiaomi Corp. decided against floating CDRs in Shanghai.

Germany has been intensifying its effort to help Deutsche Bank Chief Executive Officer Christian Sewing turn around the ailing lender. Kukies, a former Goldman Sachs banker, has been in frequent touch with Sewing and Deutsche Bank Supervisory Board Chairman Paul Achleitner. The Finance Ministry has also been seeking ways to facilitate a potential merger between Deutsche Bank and rival Commerzbank AG.

After Scholz’s visit to China in mid-January, Germany and China issued a joint statement that extolled the advantages of cooperation aimed at bringing financial relations to “a new high.”

“Both sides recognize the potential of cooperation in the financial sector,” the German and Chinese governments said in the statement, which specifically noted that China welcomes a German bank applying for a CDR license.

For China, the country is keen to show its economy is opening as it counters pressure from U.S. President Donald Trump. One of China’s top regulators said at the World Economic Forum in Davos last week that more approvals to foreign banks would be granted in the next six months.

Scholz said that one of the key objectives of his trip to Beijing was to secure “rules and agreements which make it possible that banks and insurance companies can be competitive” in China. He’s also repeatedly highlighted the need for Germany to have strong international banks to help finance the country’s vital export sector.

Deutsche Bank is scheduled to report 2018 earnings on Friday. A disappointing fourth-quarter performance would increase pressure on Sewing -- who has asked for time to turn around the bank before considering a merger -- to come up with a new plan.

The CEO has repeatedly said that the bank is on track to meet its full-year targets of making a profit and keeping costs adjusted for one-time expenditures below 23 billion euros ($26.3 billion). But the bank has said that dramatic images of a police raid in a money-laundering probe hit revenue in December.

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