Chinese conglomerate HNA Group (HK:0521) has recently acquired more than 3% worth of stakes in ailing German banking and financial company Deutsche Bank (NYSE:DB).
Deutsche Bank has been troubled with the settlement of US penalties from the US Justice Department in the past year and has continually sought help from other companies and investors for a long-term investment, as Germany’s Chancellor Angela Merkel has decided that no help would come to the German bank when it comes to affairs outside of the country.
According to a spokesperson of HNA Group, they have full confidence in the management of the German bank and are planning on keeping a closer look at Deutsche Bank’s next actions as it extends its support as a shareholder when needed.
HNA’s 3.04% stake is reportedly worth at around $799 million or 750 million euros with its current share price, making HNA Deutsche Bank’s largest shareholder next to Qatar who owns around 10% of DBK stock and BlackRock which owns 6.1%.
Deutsche Bank’s Recent Performance
Just a few weeks back, after Deutsche Bank reduced its fine from the US Department of Justice from $14 billion to $6.5 billion, the company faced another fine of $630 million in settlement of money laundering allegations in Russia.
According to the New York State Department of Financial Services and Britain’s Financial Conduct, Deutsche Bank was placed under investigation for money laundering $10 billion in Russia, which was initiated through mirror trades in the bank’s branches in London, New York, and Moscow. The fine consisted of a £163 million fine or $204 million from the FCA and another $425 million from the Department of Justice.
Shares of the bank slid to around 7% on news that shook investor confidence, even further as the bank only held around $6.5 billion in litigation reserves by that time but has not moved down any further on the additional $630 million fine.
Overall, the bank has been able to recover by more than 50% in the past year, following the beginning of its troubles as Deutsche Bank initiated cost-cutting that helped the company in raising the necessary funds in settling the allegations. This included cutting employee bonuses and reducing its investment in sectors which are deemed unprofitable by the company.
Trump Trouble
In the middle of Deutsche Bank’s troubles with the US Department of Justice and other agencies, the bank has reportedly taken a closer look on US President Donald Trump’s personal account with potential connections to Russia.
Aside from President Trump’s accounts, accounts of his family members, including Ivanka Trump and husband Jared Kushner were also reportedly examined by the bank. Although the investigation has ended, the news has placed the banking firm under the Department of Justice’s close eye for potential misconduct.
Congressman Bill Pascrell Jr. has stated the importance for the people to know the bank’s involvement with the current US President and whether any loans from Russia was given to Trump. Currently, the US President remains to be the bank’s biggest and most high-profile client.