Deutsche Bank plans to rebrand its asset management arm as DWS, the name of its main retail brand, and put a structure in place that gives the group full control even after the unit's planned stock market listing. Germany's largest lender earlier this year said it would list a minority stake in Deutsche Asset Management, which sources say could achieve a total valuation of around 8 billion euros ($9.5 billion), as part of a broader overhaul following costly lawsuits and trading scandals.
On Tuesday, the bank said at a capital markets day that the asset management unit would assume the legal structure of a partnership limited by shares, or KGaA, during the first quarter of 2018.
That structure ensures Deutsche Bank can retain control of the unit even if its shareholding falls below the 75 percent needed to dominate normal German stock corporations, possibly as part of a merger of the unit with a peer.
However, in the event that Deutsche's holding falls below a certain - so far undisclosed - threshold, the unit would lose the KGaA status and become a normal stock corporation or AG.
Typically, such a threshold would be 50 percent. Ingo Speich from fund manager Union Investment said the plan could come with a price. "The KGaA structure increases complexity and may lead to a valuation discount," he said.
Deutsche Bank board member Karl von Rohr is poised to become chairman of the unit, while its 12-member supervisory board will include another one or two Deutsche Bank representatives, four labour representatives and five or six independent directors.
"We want to unlock the full potential of Deutsche AM to facilitate growth," unit head Nicolas Moreau said.
The listing will give the unit the ability to attract and retain talent by incentivising staff with bonus shares, although it is not targeting overall pay increases. It will also enable the unit to use its shares to fund acquisitions.
The business is looking for ways to strengthen its so-called alternative products offerings, especially in areas such as structured credit and real estate asset management, bolster its distribution network and expand in countries such as Japan, Korea, Taiwan and Singapore.
Its management is, however, focused on smaller deals.
"I will not go around the world with my cheque book. We will probably not do large transformational deals, we will do add-ons," Moreau said.
In China, where the unit holds a 30 percent stake in Beijing-based Harvest Fund Management, it is aiming to raise money for investments in Europe or the United States, but not in China.
In the United States, Moreau has abandoned a previous strategy of offering a broad product range and wants to focus on areas such as alternative investments, fixed income and real assets.
Deutsche Asset Management currently has roughly 700 billion euros invested worldwide and plans to add 3-5 percent to that annually. It saw outflows of 5.5 percent last year as worries about Deutsche Bank, dogged by legal headaches, prompted some investors to shun the lender.
"We have had a challenging 18 months from mid-2015. We are through this now, we are on a good trajectory again in 2017," Moreau said.
The unit, which offers 600 investment funds, is also targeting management fee margins of more than 30 basis points, an adjusted cost-income-ratio of less than 65 percent and a dividend payout ratio of 65-75 percent.
In the first nine months, the unit posted a management fee margin of 32 basis points, while assets under management grew by 1 percent.
Total assets under management of the world's largest 500 money managers grew 5.8 percent to $81 trillion in 2016, according research from Willis Towers Watson, which lists Deutsche Bank's as the 14th largest firm, behind US groups Blackrock, Vanguard and State Street, as well as European peers such as Allianz, Axa, BNP and UBS.
Some investors have indicated in the past they would prefer a stronger focus at Deutsche's asset management arm on so-called passive investments or exchange traded funds (ETFs). Its main business is currently actively managed funds.
The asset management unit has 3,800 staff and aims to keep headcount stable.