Sal.Oppenheim aims to sell investment bank: sources

FRANKFURT (Reuters) - Stricken private bank Sal. Oppenheim is headed for a split-up once flagship German lender Deutsche Bank has taken an equity stake, sources close to the situation told Reuters.

Luxembourg-based Sal. Oppenheim aims to sell its investment banking business to focus solely on managing assets for wealthy clients if Deutsche Bank takes a stake in the private bank as planned, the sources said.

"The first interested parties have already knocked on the door," one of the sources said, adding that the potential suitors were mainly European banks from outside Germany.

Sal. Oppenheimer and Deutsche Bank declined to comment.

Among the potential suitors for the investment banking operations are France's BNP Paribas and Britain's Barclays Bank , said other sources familiar with plans for the bank.

BNP showed an interest in investing in Sal. Oppenheim before the agreement with Deutsche, those sources said. Barclays Bank has said it wants to expand its investment banking operations.

BNP and Barclays both declined to comment.

Deutsche Bank, which last week said it was in talks to take a stake in Sal. Oppenheim, is primarily interested in the two-century-old bank's wealth management business and its BHF Bank subsidiary, said another person who is close to the talks.

"The investment bank at Sal. Oppenheim is certainly not the focus for Deutsche Bank," the person added.

Selling an investment bank may be a tall order given that the market is plagued with overcapacity for merger and acquisition advice despite the severe cutbacks at Sal. Oppenheimer's larger rivals.

A formal auction process for Sal Oppenheim's investment banking arm, which includes about 450 bankers, has not yet begun, according to the source who had said that the potential suitors were mostly European banks.

The timing of an investment bank sale was still open and depends on how talks with Deutsche evolve, the person said.

RAISES EQUITY CAPITAL

Sal. Oppenheim said on Tuesday that it had raised its equity capital by 300 million euros to around 2.1 billion euros.

"The injection was made by shareholders and financed by Deutsche Bank," it said in a statement on its Web site.

Sal. Oppenheim confirmed last week it was in talks for a "strategic partnership" with Deutsche Bank, which would be allowed to conduct due diligence, but declined to give details on the proposed transaction.

It said on Tuesday that the capital increase was the first step in that process.

Sal. Oppenheim had 132 billion euros ($187 billion) of assets under management at the end of 2008.

Analysts have said that Sal. Oppenheim is estimated to be worth just over 2 billion euros.

Financial sources close to the Deutsche Bank-Sal. Oppenheim talks told Reuters on Monday that Deutsche Bank aims to take an initial stake of between 30 and 50 percent in Sal. Oppenheim and would likely boost this to a majority holding at a later stage.

The two banks declined to comment on this report.

Sal. Oppenheim's investment banking operations made a 2008 loss of nearly 120 million, its first annual deficit since the Second World War, primarily because of losses on share trading.

The investment bank, led by partner Dieter Pfundt, had been the main money spinner for the bank in recent years. Its team focuses on advising clients on mergers and acquisitions as well as trading.

Deutsche Bank shares ended the session down 4.7 percent at 45.33 euros.

($1=.7059 Euro)

(additional reporting by Edward Taylor and Patricia Uhlig; editing by Karen Foster)