FRANKFURT/LONDON - Deutsche Bank (DBKGn.DE) is interested in bidding for commodity trading joint venture RBS Sempra as part of plans to strengthen its commodities business and is one of several suitors remaining, people familiar with the matter said on Thursday.
A deal, likely to be worth around $3 billion, would offer a quick entry into a lucrative market with a diverse, global trading book.
Deutsche is clearly one of the bidders, one of the sources said.
There were now a handful of potential buyers, whittled down from earlier interest shown by about 20 firms, another source said. Morgan Stanley (MS.N) has looked at the business and may or may not be interested, a different source familiar with the matter said.
Royal Bank of Scotland (RBS.L) -- majority-owned by the UK government -- is being forced to sell its 51 percent interest in RBS Sempra by European competition authorities due to the bailouts it has been given by Britain. Its partner Sempra Energy (SRE.N) is also considering selling its stake, sources have told Reuters.
The business, which trades commodities ranging from oil and natural gas to metals and agricultural products, is likely to fetch about $3 billion, bankers and industry sources have said.
RBS paid $1.7 billion for its stake in April 2008 and Sempra Energy invested $1.6 billion.
RBS and Deutsche declined to comment.
Other banks to have shown interest include Goldman Sachs (GS.N) and Barclays Capital (BARC.L), the Financial Times said.
DEUTSCHE EYES COMMODITIES
Germany's largest bank has been actively expanding its involvement in commodities, launching 11 new commodities indices, three new commodity systematic mutual funds and one new commodity exchange-traded fund this year.
Talk of Deutsche Bank's interest fueled market speculation on Thursday that Germany's biggest lender might need to increase capital to finance a deal.
By 1300 GMT (8 a.m. EST), Deutsche Bank's shares were down 1.9 percent at 51.2 euros, in line with a weaker European bank sector.
Deutsche said this week it wanted to expand in commodities and has made clear it would carry out a capital hike if necessary to finance worthwhile acquisitions.
It wants to be among the top five commodities firms, improving on its current No. 6 position and a 5.2 percent market share of the top nine companies, it said at an investor presentation on Tuesday.
Some investment banks have bulked up in commodities in recent years and hold strong market positions, led by the top three of Goldman, Morgan Stanley and BarCap.
But others have been forced to backtrack, including RBS and Citigroup (C.N). The U.S. bank two months ago unloaded its Phibro energy trading business to oil company Occidental Petroleum (OXY.N) in order to defuse a battle with U.S. regulators over a star trader's hefty compensation.
Trade buyers and investment firms have also shown an interest in RBS Sempra.
JRJ Group, an investment firm set up by the former European head of Lehman Brothers, last week said it would take a look after snapping up a majority stake in a smaller commodities firm, Marex Group.