Is the EU on brink of war with China over Germany’s Deutsche Bank?

Wednesday, July 19, 2017
By Paul Martin

THE EU is poised to go to war with China over its purchase of a hefty slice of German finance giant Deutsche Bank.

Wed, Jul 19, 2017

Massive Chinese conglomerate HNA has bought 9.9 percent of Germany’s largest lender – just 0.1 percent below the threshold which would trigger a mandatory EU investigation.

The investigation would look at whether investors have links to terrorism and whether they offer a sound medium to long-term prospect for the bank.

Banking watchdog the Single Supervision Mechanism (SSM), which is operated by the European Central Bank, is also looking at the possibility of reviewing Deutsche Bank share purchases by Qatar’s royal family – also a sliver below the 10 percent mandatory inquiry threshold.

Although neither meets the 10 percent trigger point the SSM could invoke a clause that certain investors exert “significant influence” over the bank to launch a full-scale probe.

But China is concerned the EU is deliberately attempting to block lawful Chinese investment.

The initial work carried out by the SSM comes over concerns that the EU are looking to clamp down on what it sees as unfair Chinese purchases of companies within the bloc.

Germany announced plans last week to block takeovers of the country’s companies over fears about the scale of Chinese dealmaking in recent years.

HNA was formed as an aviation company in 2000. It has expanded into real estate, financial services, tourism, logistics, and owns 25 per cent of Hilton Worldwide. Most recent figures put operating revenue in 2015 at more than 11.3 BILLION.

If the initial SSM investigation decides there is a case to answer of the two shareholders having a significant influence then a formal investigation will be launched.

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