DeAM set for sweeping revamp - report
GERMANY - Kevin Parker, the new head of Deutsche Bank’s asset management activities, is to unveil a sweeping restructuring, placing a particular emphasis on embattled Deutsche Asset Management in the UK, a German newspaper has reported.
According to the Frankfurter Allgemeine newspaper, which did not source its story, Parker wants DeAM in the UK to immediately end the practice of using asset managers for single investment mandates.
Instead, single mandates would be grouped according to a distinct investment strategy to create so-called “single house portfolios.” A team of asset managers would then be put in charge of each portfolio.
The newspaper said each portfolio team would be responsible for its own costs, profitability and staffing. It said bonuses for asset managers in the teams would depend on the performance of the portfolio and, where relevant, on individual share recommendations.
The point of the measures, the newspaper added, was to dramatically cut costs and boost profitability at DeAM in the UK.
The unit has been hit recently by a mix of senior executive departures and the loss of billions of euros in UK institutional business.
A spokeswoman for DeAM in Frankfurt declined to comment on the newspaper article, saying she had no idea of its source.
Parker, who was given responsibility for asset management in September, is under pressure to lift the overall profitability of his division. Its return on equity sank to nine percent in the third quarter from 12% at the start of 2004.
To achieve this, the Frankfurter Allgemeine said Parker’s restructuring plan would go beyond DeAM in the UK to encompass other activities, including DB Advisors, the bank’s structured trading business in New York.
According to the newspaper, DB Advisors will strictly separate trading in hedge funds on its own account from that done on behalf of clients.
In October IPE reported that DeAM was understood to have absorbed DB Advisors following the resignation of the unit’s head Roger Ehrenberg.
The Frankfurter Allgemeine also said Parker would reorganise Deutsche’s asset management activities into six clear product lines, including real estate funds, alternative investments, passive and active funds for institutional clients (i.e. DeAM) as well as passive and active funds for retail clients (i.e. DWS).
It added that Deutsche was considering pulling out of passive asset management owing to the slim margins related to the business.
Regarding speculation about job cuts, the newspaper said they were inevitable but did provide further details.