By Kathrin Jones, Arno Schuetze and Andreas Kröner
FRANKFURT (Reuters) - Deutsche Bank <DBKGn.DE> is considering a u-turn in its retail banking strategy and may opt for a full integration of its Postbank <DEUPF.PK> operations instead of a sale, three people close to the bank said.
The possible change of plan comes as Deutsche Bank is under the threat of a multi-billion-dollar fine from U.S. regulators which has prompted its management to rethink a year-old strategic overhaul that has made faltering progress, people close to the matter said earlier this month.
Deutsche Bank, which bought Postbank in several steps from 2008 for a total of 6 billion euros ($6.5 billion), had earmarked the unit for sale in a bid to shrink its balance sheet. But no serious buyers have emerged and a stock market listing is seen as difficult in the current market.
With a Postbank divestment unlikely, the bank's supervisory board is set to discuss alternatives at its Wednesday meeting, including its full integration into Deutsche, the people said.
Deutsche Bank and Postbank declined to comment.
The move, if agreed, would see Deutsche's Postbank holding dismantled and its Bonn headquarters dissolved. The yellow Postbank brand would be kept and Postbank customers would be serviced by a newly created Deutsche Bank retail banking unit, which would also comprise the so called blue bank, as Deutsche Bank-branded retail operations are known, the sources said.
The full integration would not only allow Deutsche Bank to cut overhead functions, reduce the number of branches and cut thousands of jobs, but also secure Deutsche Bank's access to Postbank customers' deposits, the sources said.
When Deutsche Bank looked at its retail strategy in 2015, it decided to keep its 'blue bank' after regulators signaled concerns that it would lose billions in deposits, which could drive up the lender's refinancing costs in a potential crisis.
"The full integration is an option which has a lot of internal backing as the deposits have become much more important," one of the sources said.
Banking regulators have already been informed about a potential full integration of Postbank, another of the sources said.
Postbank had 148 billion euros in assets as of end-June and posted a net profit of 141 million euros in the first half of 2016. It currently employs almost 19,000 staff. It said in July that it expects a drop in 2016 profit.
Some investors have said they would not mind a strategy shift as Postbank has shown a steady flow of earnings.
"But the credibility of management would take a serious hit," a top ten investor has said.
($1 = 0.9195 euros)
(Editing by Christoph Steitz and Alexander Smith)