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China’s Wanda weighs move for Postbank

China’s largest property developer Dalian Wanda Group has set its sights on banks in Europe, including Germany’s Postbank, as it diversifies away from its core real estate business.

The Beijing-based group led by China’s richest man is actively looking at several European financial institutions, three people familiar with the matter said. Postbank — which has been put up for sale by Deutsche Bank — was among the institutions on Wanda’s list, according to two of those people.

The company’s hunt for financial assets was at an early stage and so far there has been no official approach to Deutsche, said the people.

But the interest in Postbank will be a boon to Deutsche, which has hit hurdles in its attempts to offload the German retail unit. One person familiar with the matter said Deutsche was seeking €6bn for the unit, which is suffering from low returns in the face of persistently low interest rates and competition from state-backed rivals.

Both Wanda and Deutsche declined to comment.

The acquisition of a bank by Wanda — following a multiyear global acquisition spree of US cinemas and production studios, an Italian yachtmaker and a sports rights group in Switzerland — would be its first foray into the financial sector.

The move would also be another step towards diversifying away from its focus on being one of the world’s largest private property developers. In China, Wanda is best known for its massive development projects, including a series of theme parks.

However, its emergence as a potential buyer of banking assets in Europe took some in the financial sector by surprise. Some observers noted that the company has virtually no experience in the industry in China or abroad.

It also comes at a time when Chinese regulators are cracking down on outbound corporate investments that do not fit with companies’ core lines of business. It was unclear if banking assets would be deemed a primary part of Wanda’s operations.

Over the past two years, group chairman Wang Jianlin has indicated that Wanda would adopt an “asset-light” strategy for real estate while expanding its so-called cultural division, which includes theme parks and a growing portfolio of global entertainment-related businesses.

Since 2014, Wanda has spent about $11.8bn on overseas assets, according to data from Dealogic. Mr Wang’s net worth was $31.4bn, according to Forbes.

Meanwhile, analysts covering Deutsche remain sceptical that it can successfully sell even part of its stake in Postbank. Citigroup analysts wrote earlier this month that there was a risk a sale would not materialise.

A sale of Postbank’s mortgage-heavy book would boost Deutsche’s leverage ratio, a key regulatory metric that measures capital to overall assets. International standard-setters want to increase leverage ratio requirements for the largest and most complex banks in the world.

But the bank has remained tight-lipped over Postbank’s potential price tag. Marcus Schenck, Deutsche’s chief financial officer, responded to analysts’ estimates that it carried €5bn of book value by saying it would not disclose the price “because it’s not a terribly helpful metric to disclose in particular when an M&A track is also an option”.

He added: “We will only be selling these assets if it gives us a meaningful capital relief. And hence, we will certainly not accept a major writedown.”

Wanda joins a small group of Chinese conglomerates eyeing banks and other financial institutions in Europe, including Fosun International and Anbang Insurance. In November, Fosun became the largest shareholder in Portuguese bank Millennium BCP and also owns the country’s largest insurer, Caixa Seguros Saúde.

Bankers noted that Wanda would likely join a consortium of bidders for a large financial institutions acquisition in Europe.

Additional reporting by James Shotter in Frankfurt

Via FT