Deutsche Bank chief John Cryan pledged to redouble restructuring efforts on Thursday, warning the bank faces tough times as it finalises talks with U.S. justice authorities over a $14 billion fine, which has rocked confidence in the lender.
While it would be difficult for Deutsche to keep such loans on its books in the long term, as that would require the struggling bank to set aside scarce capital, such a purchase could be attractive if the loans were quickly sold on at a profit.
Deutsche may ultimately restrict any purchase to a small part of the billions on offer or pull out. But throwing its hat in the ring shows it wants to remain active in the market.
The sources said banks Credit Suisse and Citigroup, together with asset managers Apollo Global Management , KKR and Oaktree Capital Group, were also among the more than 20 bidders for the HSH portfolio, which are expected to submit their first offers shortly.
Credit Suisse, Citi, Oaktree and KKR declined to comment, while Apollo did not immediately respond.
The HSH portfolio also includes around 2 billion euros of loans related to real estate assets in Britain, Germany and other European countries as well as aviation and energy debt, two finance industry sources said.
HSH turned to its state owners after risky assets turned sour in 2008.
In March, the European Commission approved a bailout which includes a plan to hive off a total of 8.2 billion euros in bad loans, 5 billion of which have been transferred to the state owners, while the lender must sell up to 3.2 billion itself. HSH had offered 4 billion euros of loans in total and is looking to sell 3.2 billion euros out of that.