Deutsche Bank has placed its asset management arm under review and is considering all options including a sale of the unit, as the eurozone crisis and regulatory changes force European banks to change course.
In a statement today, Kevin Parker, global head of asset management and a member of the Deutsche Bank Group Executive Committee, said: "Our aim is to find the best strategic option to maximize the performance and potential of the asset management division."
European investment banks have come under increasing pressure from the eurozone crisis and regulators to shore up balance sheets and raise capital. According to research from Huw van Steenis, an analyst at Morgan Stanley, banks may have to decrease their balance sheets by between €1.5 trillion and €2.5 trillion over the next 18 months.
A spokeswoman from Deutsche Bank said: "The review was triggered by changing conditions in the asset management industry, particularly the recent regulatory changes and associated cost, and the changes in the competitive landscape."
The strategic review will examine all of Deutsche Bank's asset management industry globally, except the predominantly retail DWS franchise in Europe and Asia. Discounting the retail business, Deutsche Bank has €162bn in institutional funds under management, €46bn in alternatives and €150bn in insurance mandates.
Net new money has been negative in Deutsche Bank's institutional business for the last two quarters, with outflows of €12bn over the third quarter. Revenues also fell 12% from €453m in the second quarter to €397m in the third quarter.
One financials analyst, who declined to be named, said: "Historically they have struggled with their asset management business. None of the investment banks can really say they have successful asset management business. Now it is all about raising capital. Deutsche Bank is one of the biggest derivatives markets players, but they need to put more capital behind it."
RBC Capital Markets asset management analyst Peter Lenardos said: "Deutsche Bank is not selling the crown jewels, but instead subpar assets with ongoing net outflows. Given current markets conditions, I cannot think of a buyer for such assets, and maybe that is why an announcement was made."
In 2006, Deutsche Bank began turning Frankfurt back into its asset management operational hub, reversing a 20-year strategy of developing rival headquarters in London and New York.
It would not be the first time Deutsche Bank sold off part of its asset management business. In 2005, the German bank sold the majority of the UK asset management business to Aberdeen Asset Management.
Analysts remain uncertain who would be interested in Deutsche Bank's asset management business. Dexia Asset Management, part of the troubled Belgian bank Dexia, was put up for sale in October, and has yet to find a potential buyer.
This story originally appeared here.
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