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Deutsche Bank has reached a €305m deal to sell parts of its Polish business to Santander, as chief executive John Cryan presses ahead with his plans to streamline the underperforming German lender.

In a long-awaited announcement, Germany’s biggest bank said on Thursday that it would sell its Polish private and commercial banking units to the Spanish lender’s Polish arm, Bank Zachodni WBK.

However, a troublesome foreign currency mortgage portfolio will be excluded from the deal, and Deutsche Bank will keep its investment and transaction banking businesses in the central European country.

Since taking the helm at Deutsche Bank two and a half years ago, Mr Cryan has been working to make the bank simpler in an effort to boost returns, which have languished in recent years. He has cut jobs, closed Deutsche Bank’s onshore investment banking business in Russia and set in train withdrawals from a number of smaller markets.

Some investors have pushed for Deutsche Bank to sell its retail banking operations in Europe outside Germany, and the bank had been seeking to offload its Spanish retail business. However, Deutsche Bank told the Financial Times in October that it intended to keep it.

The deal will cement BZ WBK’s position as the third-largest lender in Poland and is the latest sign of consolidation in the country’s banking market. Poland’s largest lender, PKO BP, denied last week that it could merge next year with its nearest rival, Bank Pekao, which is itself in talks to merge with Alior, another local lender.

Michal Krupinski, chief executive of Bank Pekao, told the Financial Times last month that the consolidation was being driven by rising technology and regulatory costs, and that eventually the sector could be dominated by just five or six big banks.

Santander said that the deal includes about €4.4bn in assets, as well as Deutsche Bank Polska’s 113 branches and roughly 1,500 employees. The transaction is not expected to have any effect on Santander’s capital ratios. The Spanish lender said that it expected to make a return on investment of 15 per cent by 2021.

Ana Botín, Santander’s executive chairman, said that she saw “significant potential” for further growth in Poland, which has been one of the fastest growing European economies in recent years thanks to falling unemployment and soaring private consumption, and strong demand for its exports.

“The acquisition enhances our position in important customer segments, such as private banking and SMEs, while also delivering strong returns for our shareholders,” she said.

The deal, which is subject to regulatory approval, is expected to close in the fourth quarter of next year.

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