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Deutsche Bank Hedges Helped HNA Limit Losses on Stake Sale

  • China’s HNA held German bank’s shares via derivative contracts
  • Hedges saved hundreds of millions of dollars in losses
The Deutsche Bank AG logo sits reflected in a scooter mirror outside the bank's campus office building in Frankfurt.

The Deutsche Bank AG logo sits reflected in a scooter mirror outside the bank's campus office building in Frankfurt.

Photographer: Krisztian Bocsi/Bloomberg
Updated on

When HNA Group Co. became Deutsche Bank AG’s top shareholder in early 2017, the German lender’s shares were trading near two-year highs and the once-fledgling Chinese airline was voicing ambitions of turning into a big player on Wall Street. Then both firms ran into roadblocks.

HNA has since lost its seemingly insatiable appetite for growth, embarking on a selling spree after debts spiraled out of control, while Deutsche Bank shares tumbled by more than half to record lows after investors lost faith in its turnaround strategy. Fortunately for the Chinese investor, most of its German holdings were hedged against losses, allowing the firm to unload some shares this month at 16.70 euros apiece -- more than double Deutsche Bank’s latest price.