Deutsche Bank To Rejig Fixed-Income And Stream Line Wealth Management Business

November 23rd, 2012 by Trefis Team
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Changes continue across Deutsche Bank (NYSE:DB) at all levels as the largest German bank seeks to boost profitability and investor returns by working towards the goals it set itself this September as part of the ambitious ‘Strategy 2015+’ (see Deutsche Bank Set For Complete Shake-up As Part Of ‘Strategy 2015+’). The bank is reportedly combining its global finance & foreign exchange, rates and credit businesses into a new fixed-income & currencies business unit to benefit from the integration of these services on a single platform. [1] Deutsche Bank is also looking to squeeze out more value from its wealth management business for the ultra-rich, Sal. Oppenheim, by forcing the unit to share the resources its global wealth management business already employs. [2]

We maintain a price estimate of $46 for Deutsche Bank’s stock, which is less than 10% above the current market price.

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Integrated Fixed-Income & Currencies Business To Cater To Regulatory Requirements Better

Deutsche Bank boasts of having one of the biggest and most profitable forex and bond trading businesses in the world – a reputation it has built over the last decade. And despite having seen some difficult quarters in recent years, Deutsche Bank has decided against drastic cutbacks to cater to stricter regulatory demands. Instead, the bank is consolidating its smaller operating units under bigger umbrella divisions to improve transparency and to mitigate the regulatory requirements over larger asset bases.

Sal. Oppenheim Has Its Independence Revoked

Since Deutsche Bank acquired Sal. Oppenheim in October 2009, the wealth management business for the German ultra-rich has been run as an independent unit with minimal interference from the parent company. But that is set to change as Deutsche Bank seeks to avoid redundancy in these operations when taken together with its considerably big asset & wealth management business. The wealth manager has assets under management of around $175 billion – about 16% of the over $1.1 trillion in total assets managed by Deutsche Bank’s private wealth & asset management business.

Sal. Oppenheim’s business will be reviewed over the next 15 months, during which all functions that can be carried on using Deutsche Bank’s resources will be transferred out of the business – resulting in a sizable reduction in the number of employees for the unit. It must be noted that Sal. Oppenheim recently underwent its own restructuring which saw it reduce its employee strength from around 2,400 to 930. [3]

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Notes:
  1. Fan and Rankin reshape Deutsche Bank’s fixed-income business, Financial News, Nov 19 2012 [↩]
  2. Sal. Oppenheim raises its profile in wealth management and plans to make greater use of Deutsche Bank’s infrastructure, Sal. Oppenheim Press Releases, Nov 20 2012 [↩]
  3. Deutsche Bank’s Sal Oppenheim to cut jobs in latest overhaul, Reuters, Nov 20 2012 [↩]