Deutsche Bank stock slumped, and European bank shares dropped to the lowest level since late 2016 after the WSJ reported that Deutsche Bank's top investor, HNA Group - one of China’s largest conglomerates - intends to completely exit its stake in the German bank as it reverses a debt-fueled acquisition spree under pressure from Beijing.

The extremely levered and cash-strapped Chinese conglomerate, which most recently still held almost 8% of DB's voting rights, is selling the investment following orders from China that it focus on its core airline business, as what was once the world's most aggressive rollup and acquiror of international companies goes into reverse. It’s not clear how HNA would sell the stake, which it controls through a series of complex derivatives, according to Bloomberg.

HNA Group, a company which previously was dubbed as systemically important for China's economy, and an owner of airlines and hotels that amassed more than $40 billion worth of businesses and stakes in companies in an aggressive global acquisition spree from 2015 to 2017, has been dismantling its overseas empire to shrink its balance sheet under renewed pressure from Chinese regulators and its creditors. HNA's sale of its DB stake had been previously speculated, but never actually confirmed.

The sale will only add to pressure on Deutsche Bank, whose shares have slumped amid several unsuccessful turnaround efforts, and could act as a catalyst amid speculation that it may need to merge with another lender in the long run. As for HNA, the liquidation will mark the unwinding of one of the most high-profile investments made during a multi-year acquisition spree that cost the company tens of billions of dollars.

DB shares fell as much as 2.1%, bringing its 2018 losses to a staggering 40%.

As recently as 2017, HNA held as much as 9.9% of Europe's largest bank through a combination of outright holdings and options, but it’s been reducing the investment and replacing actual shares with financial instruments. Most of the stake is now controlled through derivatives that limit HNA’s losses.

While HNA had previously said it was committed to the stake, Beijing instructed it to focus on its main business of travel and stop diversifying through acquisitions when China’s top leaders earlier this year agreed to help HNA raise funds, the WSJ reported. This year alone, the company has sold more than $17 billion in assets, including its holdings in Hilton Worldwide Inc.

In addition to its current 7.6% stake in Deutsche Bank, which it plans to gradually dispose of over the next 18 months, HNA also plans to sell assets currently valued at more than $10 billion. They follow announced or completed asset sales totaling roughly $20 billion.

News of HNA's liquidation pressured not only DBK stock, but the entire European banking sector which has been hit hard by recent global developments, and today traded at a 22 month low, hitting the lowest level since November 2016.

There was some good news for DB investors: it's not personal. HNA is in also talks to sell California-based technology distributor Ingram Micro, which it bought for $6 billion in 2016—and Zurich cargo handler Swissport International Ltd., WSJ sources said. It also plans to dispose of its stakes in dozens of Chinese banks, trusts and insurance companies.

HNA’s exit would leave a void in Deutsche Bank's org chart that could attract other strategic buyers, such as Cerberus Capital, which is already a top investor in Deutsche Bank and also holds a large stake in rival Commerzbank AG. That has prompted speculation in the past that it may seek to combine the two.

As for HNA, it remains burdened by one of the largest interest expenses in the world according to Bloomberg. In July, it was roiled by the sudden death of co-Chairman Wang Jian, a tragedy that threw a wrench at its normalization plans as Wang was said to be the mastermind behind the purchase of many of the assets that are now being sold.

To some, HNA's departure may be a welcome move: the conglomerate has long been a controversial shareholder for the lender. After HNA helped anchor Deutsche Bank’s $8.5 billion capital hike in early 2017, it has since become a source of infighting and uncertainty for the lender’s executives and investors. For most of last year, Deutsche Bank’s then-CEO, John Cryan, refused to meet with HNA, irking Deutsche Bank Chairman Paul Achleitner, who had courted the Chinese investor. Cryan viewed the structure of HNA’s investment in Deutsche Bank as speculative and risky for other investors.

Cryan did eventually meet HNA Chief Executive Adam Tan in November 2017. Just a few months later, Cryan was ousted as Deutsche Bank CEO.