Deutsche Bank To Keep BHF Bank After Ending Sale Talks

Deutsche Bank AG (DBK.XE) said Monday it has decided to keep its BHF Bank, a surprising move that ends months of intense negotiations with Liechtenstein's LGT Bank on the sale of the unit.

Deutsche Bank said it will now incorporate the business operations of BHF Bank, and its main objective will be to strengthen the Private Wealth and Asset Management businesses.

Germany's biggest commercial bank said in a press statement that talks with LGT Bank were ended after discussions between the parties and the supervisory authorities. It didn't elaborate further.

The failure of the talks comes as a small blow to Deutsche Bank, which had entered exclusive talks with LGT Bank in December and said as late as February that talks were on track for a deal with LGT to be signed in the first quarter.

However, negotiations dragged on for the last few weeks, as LGT was said to be interested only in acquiring parts of BHF Bank, while Deutsche Bank was set to sell all of the bank in one piece, trying to avoid a complex and difficult breakup of the bank.

While both sides wouldn't comment further on the reason for the failure of the talks, observers had wondered whether LGT was willing to pay the estimated book value of EUR600 million that Deutsche Bank had wanted. According to a newspaper report in late March, LGT was willing to pay only around EUR350 million for the parts of BHF it wanted to buy.

Deutsche Bank acquired BHF Bank in March 2010 through the acquisition of private wealth manager Sal. Oppenheim. While Deutsche was interested in strengthening its own wealth management business, it repeatedly stressed that BHF Bank as a whole doesn't fit into its overall strategy.

-By Klaus Brune, Dow Jones Newswires; [phone]; [e-mail]

(Eyk Henning in Frankfurt contributed to this report)