Deutsche Bank looks to offload debt pile -paper

FRANKFURT (Reuters) - Deutsche Bank (DBKGn.DE: Quote, Profile, Research) wants to sell $20 billion of loans to private equity firms, according to a newspaper report, a move that could see it follow in the footsteps of troubled lender Citigroup (C.N: Quote, Profile, Research).

Deutsche is one of the biggest lenders to private equity investors and had a total exposure to so-called leveraged loans of about 36 billion euros at the end of last year.

It would normally farm out such loans -- given to pay for private equity takeovers -- to other banks but it has become harder to sell on the debt in the wake of a global credit squeeze.

The inability to unload the loans has put pressure on the German lender's capital. A strong financial base is important for securing a bank's credit rating.

Deutsche has also had to make heavy writedowns on the loans to reflect their falling market value as investors run for cover amid the financial crisis.

The move is part of a broader trend among investment banks to shrink their balance sheets by divesting assets, as they clear the decks in the wake of the U.S. subprime debacle, which has led to massive writedowns by many banks on their exposures.

European bank shares traded mostly lower on Monday after a weekend Swiss newspaper report that Credit Suisse would unveil writedowns of 3-5 billion Swiss francs ($2.99-$4.99 billion) when it unveils first-quarter results on April 24.

Now Deutsche is examining a sale of leveraged loans to a group of private equity investors, according to a report in the Wall Street Journal. The paper said that the Frankfurt-based group was trying to sell between $15 billion and $20 billion.

Deutsche declined to comment.