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Deutsche Bank Raises Stake in Huaxia to Almost 20%

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May 6 (Bloomberg) -- Deutsche Bank AG, Germany’s biggest bank, will increase its stake in Huaxia Bank Co. after agreeing to buy new shares from the Chinese financial company.

Frankfurt-based Deutsche Bank will boost its stake to 19.99 percent, the maximum foreign ownership allowed in China, from 17.12 percent, it said in a statement today. The lender plans to buy new shares for about 636 million euros ($811 million).

Huaxia, China’s 13th-largest bank, yesterday said it plans to raise as much as 20.8 billion yuan ($3 billion) in a private placement to Shougang Group, State Grid Corp. and Deutsche Bank to replenish capital. The German company, which has said expansion in Asia is a key focus of its growth strategy, made its first equity investment in Huaxia in May 2006.

“China is central to Deutsche Bank’s overall Asia strategy,” Robert Rankin, chief executive officer for the Asia Pacific region, said in today’s statement. The stake “provides high quality direct participation in the development of China’s retail and commercial banking market, which is experiencing one of the world’s highest growth rates,” he said.

Huaxia employed about 12,300 employees at 349 retail branches in 32 cities in China at the end of last year, Deutsche Bank said. The two lenders started a joint credit-card business in June 2007 that has 850,000 customers.

To contact the reporter on this story: Aaron Kirchfeld in Frankfurt at akirchfeld@bloomberg.net

To contact the editors responsible for this story: Frank Connelly at fconnelly@bloomberg.net; Edward Evans at eevans3@bloomberg.net

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