GERMANY – Commerzbank says it will integrate investment fund sales and production in a bid to boost return on equity.
The move follows the appointment of Achim Kassow in January to oversee both retail and asset management at board level. He took over from fellow board member Klaus Patig.
“We believe that by integrating the production and sales of fund products we can achieve a return on equity in this division as well which easily exceeds our medium-term cost of capital of 17% before tax,” the bank said in its annual report.
It added that retail banking and asset management under Kassow would “coordinate their activities more strongly in the current year, building upon their past success”.
Institutional assets under management were “virtually stable” at €28.3bn. Total assets under management were €85bn as at the end of 2004. Revenue at the unit rose 12% to €488m, with an operating profit up 86% at €167m.
“Whereas top priority went to maintaining existing portfolios last year, we plan profitable expansion again in 2005.”
The bank added that the Comselect sourcing and sales platform launched last year has been a success. “With the successful issue of two multi-manager fund of funds in conjunction with the US company SEI Investment, we realized our annual target of €100m within only 100 days.”
Fund arm Cominvest had a profit of €64.2m, up 25% year-on-year. It said the increase was largely because of “efficient cost management”. And its Luxembourg and Irish units have been renamed Cominvest SA and Cominvest Ltd., respectively.
It said retail fund inflows in Germany were more than 80% lower than the year before. “In a world of open architectures, support from our distribution partners and operational excellence are essential,” the band noted.
“For this reason, Cominvest made its organization even more sales-oriented at the start of the year, further optimizing its processes.”