The agreement covers a 20% holding that Deutsche Bank began building more than a decade ago and arranged to sell in December to PICC Property and Casualty Co. Ltd. for between €3.2 billion and €3.7 billion ($3.5 billion and $4.1 billion).
But the deal's tortuous passage through the China's regulatory system took on new urgency as concerns about Deutsche Bank's capital position mounted, particularly after Deutsche Bank warned on Sept. 15 the Department of Justice had threatened it with a $14 billion fine for the "mis-sale" of mortgage-backed securities before the credit crisis.
"Deutsche Bank can confirm that the proposed sale of its stake in Hua Xia Bank to PICC Property and Casualty has now received approval from the China Banking Regulatory Commission," the lender said. "We are now undertaking the necessary procedures to effect share transfer and complete the transaction in compliance with relevant laws and regulations."
News of the approval coincides with a visit to China by German Economy Minister Sigmar Gabriel.
A Deutsche Bank spokesman declined to elaborate on the short statement. The bank has previously said the sale of Hua Xia will bolster its common equity Tier One capital ratio by 40 to 50 basis points. It stood at 11.7% as of Sept. 30.
At the time of Deutsche Bank's third-quarter results on Oct. 27 CFO Marcus Schenck said the Hua Xia deal would close by year-end.
Deutsche Bank shares were recently up 1% at €12.38. The bank has lost more than half its market value in the past year.