Deutsche Bank sole German bid for Citi unit: sources

By Philipp Halstrick and Patricia Nann

FRANKFURT (Reuters) - Deutsche Bank (DBKGn.DE) is the sole remaining German bidder for Citigroup's (C.N) German retail operations after Commerzbank (CBKG.DE) dropped out of the running, several sources with direct knowledge of the sales process told Reuters on Friday.

Commerzbank has chosen not to bid as the deadline for binding offers passes, which one source said was because Germany's No. 2 lender was concentrating on due diligence with Dresdner Bank (ALVG.DE).

In contrast, Deutsche Bank made a firm offer and is also highly interested in Citigroup operations elsewhere in Europe that may be for sale, other sources familiar with the situation said.

Foreign banks have also been eyeing Citibank, whose retail business focuses on consumer lending. France's Credit Mutuel and Spain's Santander (SAN.MC) are still involved in the race, the sources said.

Citibank, as the German retail operations are known, has about 3.3 million customers and is expected to fetch about 4-5 billion euros ($6.3-$7.9 billion), banking experts estimate.

"The sales process is heating up," said one source familiar with the sale, adding that concrete talks with bidders would start shortly, with a decision expected by the end of July.

Deutsche, Commerzbank and Citibank all declined to comment.

Citigroup is selling some business assets as part of a restructuring in the wake of the global financial crisis.

FOREIGN CASH

UniCredit banking analyst Andreas Weese said the foreign banks involved in the sale had a stronger position.

"The most important thing for Citigroup is the price, and foreign players are more likely to pay more than Deutsche Bank," Weese said.

However, Citibank's specialized consumer credit activities would make a good fit with Norisbank, the consumer business Deutsche Bank acquired in 2006, Weese said.

Sources familiar with the matter have told Reuters that Deutsche Bank is also interested in Germany's biggest retail lender Deutsche Postbank (DPBGn.DE), which is being sold by its parent Deutsche Post (DPWGn.DE).

Deutsche Bank's Chief Executive Josef Ackermann has said the bank was open to acquisitions, though its main focus would be on growing organically.

Germany's biggest bank said this week it had agreed to buy about 10 percent of ABN AMRO's Dutch operations from Belgian-Dutch financial services group Fortis (FOR.AS)(FOR.BR) for 709 million euros.