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 centers 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 U.S. and Switzerland, while closing “a few more” booking centers 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 Friday 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 centers 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 centers 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 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.
'LESS WORRIED'
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 , Bank of America, 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.
