Deutsche Bank, Santander May Bid for Citigroup Unit

Deutsche Bank, Santander May Bid for Citigroup Unit

May 29 (Bloomberg) -- Deutsche Bank AG, Commerzbank AG, and Banco Santander SA are among banks considering a bid for Citigroup Inc.'s German consumer unit, three people with knowledge of the situation said.

Citigroup, reeling from record losses on subprime-infected assets, set a June 4 deadline for the first round of offers, said two of the people, who declined to be identified because the matter is confidential. The Dusseldorf-based division may fetch as much as 5 billion euros ($7.8 billion), analysts estimate.

Citigroup, based in New York, said this month it may sell the unit as it disposes of $400 billion of assets to shore up capital. The sale, which coincides with the planned auction of Germany's biggest consumer bank by clients, Deutsche Postbank AG, opens the door for competitors to gain a bigger slice of the German market, still dominated by state-owned lenders.

The Citigroup operations will ``fetch a nice price, so the sale is a logical step,'' said Andreas Weese, a Munich-based analyst at UniCredit SpA. ``Citigroup has been forced to do something after the subprime losses.''

Citibank Privatkunden AG, the market leader for consumer loans in Germany with 340 branches and about 3.2 million clients, has a value of 4 billion euros to 5 billion euros based on 2007 profit, Weese said. The division had net income last year of 365 million euros, down 16 percent.

``We are exploring a number of options for our retail business in Germany,'' said Jonathan Woodier, a London-based spokesman for Citigroup. ``No decisions have been made.''

SEB, BNP Paribas

Paris-based BNP Paribas SA and SEB AB of Stockholm have also shown interest in the Citigroup unit, one of the people said, as has London-based Lloyds TSB Group Plc, according to a separate person. SEB has said it wants to expand in German corporate banking.

BNP Paribas spokeswoman Christelle Maldague, Lloyds TSB spokeswoman Kirsty Clay and SEB spokeswoman Katja Margell declined to comment. A spokesman for Santander, based in the northern Spanish city of the same name, also declined to comment.

Deutsche Bank Chief Executive Officer Josef Ackermann said today that Germany's biggest bank may make acquisitions to bolster consumer banking. ``We will not stand on the sidelines'' of German banking consolidation, Ackermann told shareholders at the annual general meeting in Frankfurt. He said it ``remains to be seen'' whether Deutsche Bank will go after the Citigroup unit.

Deutsche Bank purchased German lenders Norisbank and Berliner Bank for 1.1 billion euros in 2006.

Deutsche Bank, Commerzbank

``Deutsche Bank may be more interested in Citibank than Postbank because the customers and businesses fit well with Norisbank,'' said Andreas Plaesier, a Hamburg-based analyst at M.M. Warburg. ``But there will be a lot of other banks taking a look.''

Commerzbank, Germany's second-biggest bank, ``would closely watch'' a Citibank sale, former Chief Executive Officer Klaus- Peter Mueller said on May 15. Commerzbank spokesman Peter Pietsch declined to comment.

Takeovers would shake up financial services in a market where ``tooth-and-claw'' competition has sapped profitability, Citigroup analysts said in a February report. Germany's five biggest private banks together hold 12 percent of the nation's 1 trillion-euro consumer lending market, Bundesbank data show.

Deutsche Post AG, the majority owner of Bonn-based Postbank, is accepting indications of interest from potential buyers, people familiar with the sale said. Postbank has more than 14.5 million customers and 850 branches.

Allianz SE, Europe's largest insurer, is in talks that might lead to a sale or merger of its Dresdner Bank unit and sees the first ``realistic possibility of a significant consolidation'' in Germany's banking market, Chief Executive Officer Michael Diekmann told shareholders at the company's annual meeting last week.

Allianz is considering ``all options'' for Dresdner, Chief Financial Officer Helmut Perlet said earlier this month.

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