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Deutsche tees up asset sale
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December 15, 1998: 1:48 p.m. ET
Bank makes plans for sale of $27B portfolio, but tax dilemma remains
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LONDON (CNNfn) - Deutsche Bank took the first step toward unloading its 45 billion mark ($27.2 billion) industrial portfolio Tuesday, but analysts warned that progress will be slow, and there is no sign the bank has resolved its outstanding tax issues.
Deutsche said it is placing all its industrial holdings in a separate legal entity, to provide greater clarity between the performance of its core banking operations and its investment portfolio.
Deutsche shares shot up 7 percent to 99 marks in Frankfurt, on hopes the move could be a prelude to spinning off the giant portfolio of blue-chip assets.
But experts said there was no sign Germany's biggest bank has found a way round the enormous tax burden that would accompany such a move.
Some 30 billion marks of the portfolio is estimated to be unrealized capital gains. That means under German tax rates Deutsche could have to pay a massive 15 billion marks into government coffers if it sells the portfolio.
"They can't sell things off as things stand," said one analyst, "because that would destroy value for shareholders."
Deutsche's portfolio includes: a 13 percent stake in Daimler Chrysler (worth 19 billion marks), almost 10 percent of Allianz, Germany's largest insurer (worth 12 billion marks) and a 10 percent stake in insurer Munich Re (worth 6 billion marks).
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Deutsche Bank
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