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Postbank Draws European Interest as Germans Cool

Deutsche Postbank shares rose 6.8 percent on Wednesday on a tide of European bank takeover speculation even as German banks signaled unwillingness to overpay for the country's biggest retail lender.

European banks ING, Santander, Deutsche Bank and Lloyds TSB were among the parties interested in buying Postbank, sources familiar with the situation told Reuters on Wednesday.

German mail and logistics company Deutsche Post, which owns a stake of 50 percent plus one share in Postbank, said in a statement that it had entered a "more intensive phase" of exploring options for Postbank but that no preliminary decision had been taken.

"Discussions between Deutsche Post and potential partners are moving forward quickly and efficiently," it said.

Postbank, with its 850 branches and nearly 15 million customers, is seen as a major prize in an expected broader consolidation of the German banking market in the wake of the global financial market crisis.

Commercial lenders Dresdner Bank -- owned by German insurer Allianz -- and Citibank, the German retail banking operations of U.S. lender Citigroup, are also in play.

Postbank's retail reach would bolster the otherwise tiny market shares of its main domestic rivals in a country dominated by unlisted savings banks, but it could also give a foreign bidder a major foothold in the German market in one bound.

Reuters reported earlier this week that Lloyds wanted to take advantage of beaten down bank valuations and was considering a big deal in Germany.

On Wednesday, Postbank's share got an extra boost from market talk that LLoyds was planning an 11 billion euro bid, or 67 euros per share.

Postbank shares closed up 6.8 percent at 57.90 euros, outpacing a 3.0 percent gain in the DJ Stoxx index of European bank shares.

Equinet analyst Philipp Haessler said that Postbank shares were already trading at about 9.4 times 2009 earnings, a premium to the European average multiple of 7.3 times.

"As we see only limited synergy potential due to the cooperation with Deutsche Post and the high proportion of state employees we do not see takeover prices of well above 60 euros as realistic," Haessler said in a research note.

Cool Germans

One source familiar with the matter said it was too early to speak of a front-runner in the bidding for Postbank and all the parties involved declined to comment.

Reuters reported earlier this month that Deutsche Post had received expressions of interest that were clearly above 10 billion euros, Postbank's market capitalization at the time.

However, sources close to potential German bidders Deutsche Bank, Commerzbank and Dresdner Bank said on Wednesday such a price was no longer realistic in the current market environment, noting also that the presence of other takeover targets put downward pressure on the price.

"The price is playing a decisive role," said one source familiar with the situation, adding that Postbank appeared overvalued in relation to other financial shares after months of takeover speculation.

Market talk of a 20 to 40 percent premium was unrealistic, the source said.

Commerzbank, Dresdner Bank and Postbank have also explored prospects for a three-way merger in recent weeks.

The sources close to the companies said the talks between Allianz-Dresdner and Commerzbank were much further advanced than those about a joint bid by Allianz and Commerzbank for Postbank.

The potential synergies in a Commerzbank-Dresdner Bank merger were higher than in a merger between Commerzbank and Postbank, which is focused more heavily on retail customers, one of the sources said.