Black investors buy Deutsche stake in South Africa

Deutsche Bank has become the first foreign financial institution in South Africa to sell a stake to black investors. The bank yesterday announced it was selling 15 per cent of its equities and corporate-finance subsidiaries to a black investor group, Uthajiri Financial Services, and a further 10 per cent to black staff. The two businesses account for most of Deutsche Bank's South African business. The German bank will provide the bulk of the financing for the deal, the price of which was not disclosed. The sale illustrates the lengths to which foreign companies are going to comply with legislation on Black Economic Empowerment (BEE), South Africa's drive to shift control of its economy toward formerly disadvantaged racial groups. The deal, approved by Deutsche Bank's board last year, marks the first time it has sold a stake in one of its foreign operations. Prior to the enactment last year of the BEE charter governing the banking industry, foreign banks worried that the document would force them to sell stakes in their South African branches to black investors. South African banks have been scrambling to find black equity investors, but the charter's final version exempted foreign bank branches from the black-ownership rules. [more]