Regulator dashes hopes for quick BHF-Bank sale to RHJI


* Bafin says no regulatory decision to come any time soon

* RHJI says Blackrock left consortium of bidders

* BHF to be sold for 354 mln eur in cash and shares

By Robert-Jan Bartunek and Alexander Hübner

BRUSSELS/FRANKFURT, Oct 30 (Reuters) - Kleinwort Bensonowner RHJ International faced a new regulatory delayon Wednesday in its attempts to buy Deutsche Bank's BHF-Bank, stalling a process which has already lasted two years.

The hold up in a deal valued at 354 million euros ($487million) in its latest shape came after German regulator Bafinsaid a modified offer would have to be re-submitted afresh.

"For that reason, no decision is to be expected in the shortterm," a Bafin spokesman said.

Those comments came hours after Kleinwort retooled the dealto exclude former co-investor Blackrock to meetregulatory concerns, and said it was confident of approval inthe coming weeks.

The saga raises questions about how open Bafin is to foreignbank takeover offers and prolongs Deutsche Bank's role asstepmother to BHF, which Germany's flagship lender hopes to shedas part of wider efforts to reduce its balance sheet size.

Deutsche Bank declined to comment specifically on Bafin'sresponse, saying it still aimed to sell BHF. Deutsche isconducting a wider restructuring designed to boost returns andlower its regulatory capital requirements.

"We are confident that the sale will be a success," aspokesman said.

RHJI announced exclusive talks to buy BHF from Deutsche Bankin June 2011, only to see Bafin refuse the deal, citing concernsabout BHF's ability to withstand a crisis on its own.

RHJI beefed up its offer in September 2012 by bringing inmore investors including China's Fosun Group, BMW heirStefan Quandt, and funds controlled by U.S. investor Timothy C.Collins and Blackrock.

In 2011, Bafin also scotched Deutsche Bank's initial plan tosell BHF to LGT, a bank owned by the royal family ofAlpine principality Liechtenstein. LGT and BHF had drawn up aready-to-sign agreement but decided not to pursue it following aconversation with the Bonn-based regulator.

Deutsche has sought a buyer since it inherited BHF with its1 billion euro purchase of Sal. Oppenheim in March 2010.

Under the latest proposal, Kleinwort Benson would acquire 91percent of BHF for 322 million euros in cash, while RHJI wouldacquire the remainder by issuing shares to Deutsche Bank.

RHJI and the remaining co-investors agreed to raise theirfunding to step into the breach left by Blackrock's departure.

One of the people familiar with the approval process toldReuters in August that Bafin had asked Blackrock to providedetails about how it would support BHF in acrisis.

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