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Deutsche's Postbank float may be delayed by tax issues - sources

Pedestrians pass by a Deutsche Bank logo seen near the Deutsche Bank headquarters in Frankfurt, Germany October 8, 2015. REUTERS/Ralph Orlowski

FRANKFURT (Reuters) - Deutsche Bank's (DBKGn.DE) planned stock market listing of retail unit Postbank, a key component of the lender's new strategy, may be delayed by tax issues, sources familiar with the matter said.

The new Chief Executive John Cryan, in charge of Germany's biggest bank since July, is under pressure to overhaul Deutsche, which is struggling to end costly litigation from past scandals and adapt to tighter banking rules.

In April, Deutsche Bank announced it planned to deconsolidate Postbank by the end of 2016 as part of a restructuring effort that would bolster its capital position.

While the lender has squeezed out all remaining shareholders of formerly listed Postbank, it has not yet cancelled a so-called domination agreement, which lets Deutsche control Postbank's strategy and tap into its cash flows.

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German law allows tax-free termination of domination agreements only after five years or due to "important reasons", that need to be approved by tax authorities.

As Deutsche Bank has controlled Postbank since 2011, it needs to either wait until the end of 2016 or strike a deal with tax officials if it wants to avoid heavy back taxes.

"That would cause financial pain," one of the people familiar with the matter said.

When asked to comment, a company spokesman said that Deutsche Bank's goal remains to divest the majority of the retail bank.

(Reporting by Alexander Hübner and Kathrin Jones; writing by Arno Schuetze)