Chillin' out till it needs to be funded
While it was a business decision as promised performance failed to fructify in India, and DB sold its credit card assets to local player IndusInd, others like HSBC and ING have been instead selling off US assets which had caused large holes in the Capital of the European headquarters and necessitated government bailouts. Again, while Deutsche Bank survived in 2008, 2009 amnd 2010, Basel 3 criteria make it suspect with not just GIPSI sovereign holdings that were unnecessarily rated investment grade bu tthe larger proportion of inter bank debt as capital , much more than the Basel 3 limitations imposed, and its dead credit markets in Europe mean that the bank will be getting on with asset sales
While Deutsche Bank holds a lot of tainted financial assets in its US holding company Taunus Corp, it is unlikely to address its $30 bln capital hole with the sale of those assets unlike the sale of ING and HSBC direct and Credit card companies in the US which yielded gains of $2-3 billion each
Deutsche Bank is making a start with its DWS asset management companies. Though the larger DWS is worth a cool $30-$40 billion , with Assets under management alone EUR 550 bln. According to earlier data it has updated at dws.com , more than 50% of its assets are in Germany. Asia is already a significant investment led by Singapore and Taiwan, concomitantly guided by its emerging markets research and heavily cross sold in the banking franchise. Its recent results showed an equal positive contribution from its Transaction Banking and Wealth management businesses, the latter led by DWS
According to the bank’s press release
The strategic review of the Asset Management division is focusing in particular on how recent regulatory changes and associated costs and changes in the competitive landscape are impacting the business and its growth prospects on a bank platform.
All strategic options are being considered. The review covers all of the Asset Management division globally except for the DWS franchise in Germany, Europe and Asia, which the Bank has already determined is a core part of its retail offering in those markets.
Most established analysts compare Deutsche Bank’s performance in this business with the fact that is was acquired externally from Banker’s Trust. Currently assets marked for sale include RREEF investor managers, DB Advisors, DWS Americas and Deutsche Insurance Asset Management subsidiaries, DWS Americas being the non performing US business acquired in the T transaction in 2001. It also recently sold off its US Casino investment in Vegas and is leading the US business charge thru the highly profitable Fixed Income Trading/ Corporate Investment Banking business and Transaction Banking. However it is to be seen whether changed regulations allow DB to grow its trading / CIB business in the US under the new leadership
DWS is keeping its EUR 288bln assets in Germany, Europe and Asia. The remaining may be sold without stressed FI portfolios , and thus the remaining assets may fetch a good 5-7% of assets price in the sold divisions. The growth paradigm is however still intact in Asia and banks getting out of Asia are unlikely to recover as new return of equity considering ringfencing and retail charge caps remain limited to single digits even in larger untapped markets like the US still served by Coops..
Deutsche Bank is reportedly moving staff to forex and commodities businesses where it had a smaller franchise team as it cuts its equity desks by 15% and Fixed income client business is hardly growing at all. Q4 estimates for US banks are upto 40% lower in trading income.