Deutsche Bank Puts $2.6 Billion Price Tag on Unit
Deutsche Bank has launched the sale of its global asset management business following a strategic review, putting a price tag of about 2 billion euros ($2.6 billion) on it.
Initial bids are due in the spring. As many as 50 parties have registered an interest, including Wells Fargo , the US bank, Royal Bank of Canada and Ameriprise Financial , the US business that has about $600 billion under management and administration, people familiar with the matter said.
Ameriprise has made no secret of its ambitions to expand. Columbia, its US business, has assets under management of $325 billion while Threadneedle, its UK-headquartered business, manages $96 billion in funds.
Deutsche Bank announced a strategic review of Deutsche Asset Management last month, prompted by changing conditions in the industry, including regulatory reforms. A deal would echo the sale by Barclays to BlackRock of its Barclays Global Investors unit in 2009.
Europe’s banks are under pressure from regulators to strengthen their balance sheets and their asset managers are coming up against new rules and restraints in the US and Europe. These include the so-called Volcker rule, which will force a number of banks to offload their alternative investment businesses.
At the same time, European investors have taken flight from mutual funds across the region. Investor money flowing into funds hit record lows this year across Europe, Lipper research into fund flows has revealed. Deutsche’s recent results show the bank has suffered successive quarters of net fund outflows.
The Deutsche businesses up for sale include Rreef, its alternative asset manager with about 46 billion euros ($59.9 billion) in funds, and its US asset management business which manages more than 200 billion euros ($261 billion), including 40 billion euros ($52.1 billion) in retail assets.
The strategic review also included 150 billion euros ($195.4 billion) of insurance mandates. Between them, the businesses have about 400 billion euros ($521 billion) of assets under management and earned about 200 million euros ($260.6 billion) last year, before interest, tax and depreciation say those familiar with the process.
Not included are Deutsche’s exchange traded funds and the bank’s successful domestic German business, DWS.
Kevin Parker, global head of asset management at Deutsche, wanted to buy out Rreef but was unable to secure financial backing, people familiar with the matter said.
Analysts have long forecast that Europe’s banks would be forced to offload their asset management businesses as a way of boosting balance sheets ever since the financial crisis hit in 2008. So far few banks have done so but more may be spurred by the most recent euro zone crisis.