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STAFF

Deutsche Bank has offered an out-of-court settlement to a top mainland banker who they sued for allegedly transferring millions of dollars when he worked for the German lender to an offshore company held by his relative without approval, mainland banking sources said.
The bank filed a writ in the Hong Kong High Court earlier this month demanding that Zhang Hongli, now senior executive vice-president of the Industrial and Commercial Bank of China (ICBC), repay US$6.3 million.
That amount is made up of the US$3.9 million that Zhang was said to have transferred and US$2.3 million of accumulated interest. It did not say when the transfer took place.
Zhang, also known as Lee Zhang, held senior positions at Deutsche Bank from 2001 to 2010.
Deutsche Bank has now offered to forgo the US$2.3 million in interest but still insists Zhang should pay back the transferred amount of US$3.9 million.
Neither Zhang nor his lawyer could be reached for comment. A Deutsche Bank spokesman declined to comment.
The writ said Zhang had caused the Hong Kong branch of Deutsche Bank to move US$3.9 million to the account of a company called Harperskille at the Shenzhen branch of China Merchants Bank.
Banking sources familiar with the case said a relative of Zhang was a major shareholder in Harperskille. They said Zhang insisted that the transfer was proper and that he had received verbal approval from senior Deutsche Bank management before the transfer was made.
The money is understood to be commissions to Harperskille for helping Deutsche Bank secure a deal to become an underwriter for the public listing of China Shenhua Energy - the world's second-largest initial public offering in 2005. China Shenhua was listed in Hong Kong in June that year, raising US$3.3 billion.
Many major international banks competed to be the underwriter for the IPO.
Eventually, Deutsche Bank, Merrill Lynch and China International Capital Corp got the business, defeating Citigroup and Goldman Sachs.
Sources said Zhang insisted he had sought approval from Deutsche Bank's Asia Pacific top management about the money transfer and verbally told them that his relative was a major shareholder of Harperskille.
Deutsche Bank said it was never informed and did not give Zhang approval for the transfer, sources said.
The sources said that Zhang was frustrated as there was no paper evidence to support his claim.
It remains unclear why the bank decided to ask Zhang to repay the money only many years later. It is a customary practice among investment banks, particularly those from Europe, to pay a middleman commission for bringing in lucrative deals.
But the writ comes just as regulatory scrutiny of investment banks in the US expanded into hiring practices in China. The US authorities are looking into whether large banks, including JPMorgan, hired the children of China's rich and powerful to win lucrative IPO deals.
A recent incident in which UBS hired the daughter of recently listed Tianhe Chemicals chairman Qi Wei, prompted concerns about how the Swiss bank won the underwriting role shortly after JPMorgan stepped aside from the deal, just months before the US$600 million IPO in June. UBS has suspended at least two bankers involved in the hiring.
Zhang's appointment with ICBC - the world's biggest bank by total assets - in April 2010 made him the first Chinese employee of a Western financial institution to be recruited as a senior manager at a state lender.
The 49-year old is also a member of the national committee of the Chinese People's Political Consultative Conference.
During his 10-year stint at Deutsche Bank, Zhang was known as a prolific dealmaker. Apart from the Shenhua Energy IPO, he was also instrumental in helping ICBC's record-breaking US$19 billion listing and that of China Life.
He held the dual posts as China chairman and head of global banking for Asia-Pacific ex-Japan at Deutsche Bank.
Zhang was said to have taken a steep pay cut to join ICBC. In a press release, Deutsche Bank said Zhang was "to follow [a] government call" to join ICBC.


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Business

Banking & Finance

German lender tells ICBC banker it is suing over unapproved transfer to a relative's company that it will forgo the interest in the US$6.3m lawsuit


Deutsche Bank has offered an out-of-court settlement to a top mainland banker who they sued for allegedly transferring millions of dollars.
