Deutsche Bank AG is considering the sales of several global asset management businesses in light of new regulation, rising costs and growing competition expected to weigh down future earnings.
A strategic review will focus "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," Germany's biggest lender said on November 22. "All strategic options are being considered."
The review would take into account Deutsche's institutional investor business, DB Advisers; its alternative asset business RREEF; an insurance asset management business; and its DWS Investments mutual fund business in the Americas.
Not included in the review are private wealth management or Deutsche's DWS franchises in Germany, Europe and Asia, which are seen as part of the bank's retail palette.
"This is not a strategic shift," a person close to the company said. That said, the sale comes as the world's largest banks hunker down for tougher regulatory capital rules under Basel III, which take effect in 2019. Deutsche Bank declined to comment beyond its statement.
The business has not been a major money-maker for the bank in recent years and it now lacks the scale of its biggest rivals.
Deutsche Bank manages around 516 billion euros in assets, which pales against the $3.3 trillion managed by sector leader BlackRock Inc as of Sept. 30. Deutsche's asset management operations, led by Kevin Parker, earned pretax profit of 117 million euros ($157 million) in the third quarter, mainly driven by DWS.
That opens the door for selling of DB Advisers, which has 162 billion euros of assets under management; the insurance asset management unit, 150 billion euros, and RREEF, with 46 billion euros.
The division has already been the focus of restructuring efforts and job cuts in the past.
Indeed, the announcement was greeted with skepticism among some US employees, where the funds business has been jostled by takeovers and name changes during the past decade.
Kemper Financial, in 1996, and Scudder Stevens & Clark a year later, were acquired by Zurich Financial, which then sold the combined businesses to Deutsche Bank in 2002. Six years later, DWS Scudder was rebranded as DWS Investments.