GERMANY – Deutsche Bank’s asset management division, including private clients and institutions, was hit by €7bn in outflows during the fourth quarter of 2005.
Deutsche said outflows from the division were mainly from its “lower margin” cash, insurance and fixed income products. It did not elaborate.
The bank said another factor weighing on PCAM during the quarter was a further €18bn reduction in assets related to last year’s sale of its institutional businesses in the UK and the US to Aberdeen Asset Management.
Aberdeen agreed to acquire the businesses – which under Deutsche’s management lost tens of billions of euros in mandates and suffered an exodus of senior executives – last July for £265m. As a result of the sale, Deutsche moved responsibility for worldwide asset management from London to Frankfurt.
It also elevated Axel Benkner, European head of Deutsche Asset Management and DWS, the bank’s retail fund business, to the ‘de facto’ number two in asset management after Kevin Parker, who is Deutsche’s global head.
Partially compensating for the negative developments at PCAM in the fourth quarter were €5bn in net inflows to private wealth management and a €12bn gain related to market developments. Even so, Deutsche said PCAM’s assets under management at the end of December 2005 totalled at €826bn – a decline of €7bn from a year earlier.
Speaking at Deutsche’s annual news conference, Parker said the sale of the institutional businesses to Aberdeen was very positive for the bank.
“The sale has enabled us to dramatically reduce duplication in asset management in London and Frankfurt,” Parker told journalists at Deutsche’s annual news conference. “Now we can focus on delivering alpha to our clients. We are looking to grow assets but to do so profitably.”
Deutsche also said that following the “tremendous success DWS has enjoyed in Germany and Europe”, Scudder, its US retail fund business, would be rebranded DWS Scudder.
Josef Ackermann, Deutsche’s chief executive, also told the conference that the bank would soon re-open to investment its core German property fund. He added that it had set aside €200m to compensate investors in the fund for any losses resulting from the fund’s closure.
Deutsche close the €6.1bn fund in mid-December after news of an upcoming valuation of its holding prompted panic-selling in the fund.