Deutsche Con­tin­ues its Wealth Biz Con­sol­i­da­tion

The Economic Times - - Markets: Beating Volatility - Mar­ket In­tel­li­gence

Lon­don: Deutsche Bank AG plans to push ahead with the con­sol­i­da­tion of its global wealth-man­age­ment op­er­a­tions, de­spite the neg­a­tive ef­fect on client as­sets in lo­ca­tions such as Ja­pan and Aus­tralia where it has shut book­ing cen­tres to cut costs and stream­line the busi­ness.

Ger­many’s largest bank plans to fo­cus on grow­ing its wealth busi­ness in mar­kets such as Hong Kong, Sin­ga­pore, the US and Switzer­land, while clos­ing “a few more” book­ing cen­tres be­tween now and the end of next year, ac­cord­ing to Fabrizio Cam­pelli, Deutsche Bank’s head of global wealth man­age­ment.

“The cost of com­plex­ity, partly be­cause of reg­u­la­tion and the con­trolled en­vi­ron­ment that we want to en­force, has gone up sig­nif­i­cantly and be­come too high,” Cam­pelli said in an in­ter­view Fri- day in Sin­ga­pore. “To do that ef­fec­tively and ef­fi­ciently, we need to choose” the coun­tries to fo­cus on, Cam­pelli added.

Deutsche Bank has al­ready closed wealth book­ing cen­tres in Ja­pan, Aus­tralia and the Nordic re­gion as it seeks to whit­tle down the num­ber of lo­ca­tions to a “low dou­ble-digit” num­ber by the end of 2018, Cam­pelli said. Be­fore the process started, the bank had more than 20 cen­tres around the world where it could book the as­sets of wealthy peo­ple.

Cam­pelli de­clined to say which other lo­ca­tions will be shut­tered. Fewer As­sets Client as­sets at Deutsche Bank’s wealth-man­age­ment unit dropped to 299 bil­lion eu­ros ($356 bil­lion) at the end of June from 300 bil­lion eu­ros at the end of 2016. Cam­pelli said the clo­sure of the wealth book­ing cen­ters and some other busi­nesses had some “coun­ter­ing ef­fects” on at­tempts to grow as­sets.

“The growth we ex­pe­ri­enced dur­ing the course of 2017 glob­ally was quite steep. How­ever, dur­ing the same pe­riod, we also had a num­ber of dis­pos­als and re­duc­tions of busi­nesses that kicked in," Cam­pelli said. “That’s part of our own strat­egy to con­sol­i­date the busi­ness."

The stream­lin­ing of the wealth busi­ness is nec­es­sary to help Deutsche Bank po­si­tion for growth in ar­eas deemed as core where it is HIGHS & LOWS in­vest­ing and hir­ing more, said Cam­pelli.

In Asia, the bank plans to add 50 po­si­tions in­clud­ing re­la­tion­ship man­agers dur­ing the sec­ond half of the year, Lok Yim, the Asia-Pa­cific head of wealth man­age­ment, said in June. Peter Hinder, head of wealth man­age­ment for Europe, the Mid­dle East and Africa and the lender’s Switzer­land head, said the fol­low­ing month he will hire about 20 pri­vate bankers for the re­gion.

In 2016, the bank set its sights to be one of the world’s top five wealth man­agers by 2020, a league cur­rently oc­cu­pied by UBS Group AG, Bank of Amer­ica Corp, Mor­gan Stan­ley, Wells Fargo and Royal Bank of Canada. Deutsche Bank ranks 16th, ac­cord­ing to Scorpio Part­ner­ship data pub­lished in Au­gust.

While the bank main­tains its goal to be a top player in wealth man­age­ment, Cam­pelli said he is “ac­tu­ally feel­ing a lot less wor­ried” if it takes longer to meet the 2020 tar­get. Deutsche Bank con­tin­ues to sup­port his unit, help­ing it to in­vest in tech­nol­ogy and at­tract tal­ent, he said.

“I’d rather grow con­sis­tently and sus­tain­ably and on a busi­ness model that I know we’ll not come back to re­gret in the fu­ture, than giv­ing our­selves a dead­line and run­ning the risk of tak­ing on busi­ness at a pace which in the fu­ture we will not be able to sus­tain,” he said.

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