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Business

Postbank Sticks with IPO, Rules out Sale to Deutsche Bank

Deutsche Post has said it will continue with its plans to float its retail banking arm Postbank on the stock market next month, ending speculation the unit would instead be sold to Deutsche Bank.

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Postbank's customers won't belong to Deutsche Bank.

Halting what some observers had considered an embarrassing back-and-forth over Postbank's fate, Deutsche Post CEO Klaus Zumwinkel on Thursday announced the decision to go ahead with the initial public offering of 49.9 percent of the company on June 21. He also said Deutsche Bank will remain as one of the global advisors of the share sale.

"Outside of the initial public offering there will be no sale of the Postbank, partial or otherwise to domestic or foreign investors. Nor will large stakes be given to financial institutions and other strategic investors," Zumwinkel said.

Deutsche Bank reportedly wanted to buy Deutsche Post's retailing banking operations for around €6 billion, encouraged by the German government, in the hopes of transforming itself into a national banking champion. The government is Deutsche Post's largest shareholder, controlling 62 percent of the postal services and logistics group.

The possible takeover of Postbank had rattled investors who saw a conflict of interest with the leading IPO advisor Deutsche Bank simultaneously negotiating a deal that would preempt the share sale. It also worried others who feared the government was trying to influence the country's industrial policy.

A national champion?

German Chancellor Gerhard Schröder is thought to have favored a Deutsche Bank takeover of Postbank and in recent weeks called for efforts to consolidate Germany's banking sector with the aim of making a national bank that could compete internationally. But Deutsche Bank CEO Josef Ackermann had favored a merger with another European bank, setting of an internal row within Deutsche Bank about the deal.

Deutsche Bank "handled this in a very unprofessional manner and did not correctly protect the trust of their clients," banking analyst Konrad Becker from Merck Finck told the German news agency DPA.

Zumwinkel's announcement ends speculation over the Postbank IPO, but the affair has hurt Germany's image in financial circles according to some observers. "The scrap that we've seen in recent days hasn't only hurt the Postbank flotation, but in particular it's damaged Germany as an investment location," Klaus Nieding from the German Association for the Protection of Securities Owners told Deutsche Welle.

Deutsche Post, which will now remain the majority shareholder, hopes to raise up to €3 billion in the IPO. A price range for the shares is expected to be set June 5 or 6, with the final price to be set June 19. The application for shares begins on June 7. The company said it plans to use the money on a strategic expansion -- possibly in Austria or Denmark.

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