German watchdog drops inquiry into HNA, Qatar over Deutsche Bank: source

FRANKFURT (Reuters) - Germany's financial watchdog will take no action after ending an investigation into whether China's HNA and Qatar's royal family were working together on their investments in Deutsche Bank , a person familiar with the matter said.

BaFin had been looking into whether the two largest investors in Germany's largest bank, which each own stakes of just under 10 percent, were "acting in concert", which would have violated securities laws, the source told Reuters on condition of anonymity.

HNA, which has been on a global acquisition spree in past years, began building its Deutsche stake this year in multiple steps, saying the bank's shares were "substantially undervalued and are an attractive investment", according to an SEC filing.

Qatar's royal family built up its stake first in 2014 during a capital increase.

Both Qatar and HNA have been granted a seat on the Deutsche Bank board.

Deutsche Bank and HNA declined to comment, while representatives for Qatar were not immediately available to comment on the development, which was earlier reported by Bloomberg News.

This week Cerberus, the U.S. buyout fund, emerged as Deutsche Bank's fourth largest shareholder behind HNA, Qatar and money manager BlackRock (NYSE: BLK), with a 3 percent stake.

(Reporting by Tom Sims; Editing by Georgina Prodhan and Alexander Smith)

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