Deutsche Bank considers listing asset management unit: Report

Reuters with
Shareholders of Deutsche Bank arrive for the bank's annual general meeting in Frankfurt, Germany, May 19, 2016.
Kai Pfaffenbach | Reuters

Deutsche Bank is considering a partial initial public offering of its asset management unit as part of an overhaul following its record payout over toxic mortgages in the United States, several people close to the matter told Reuters on Tuesday.

The deliberations are still at an early stage and no decisions have been made, the sources added. Prior to such a move, the unit would seek to get its main registration moved to Luxembourg, which has clear tax and regulation advantages, one of the sources said.

Deutsche Bank declined to comment when contacted by CNBC.

The bank is expected to present a strategy update to investors in spring and after international banking supervisors reach a deal on new bank capital rules.

Germany's biggest bank last week finalised a $7.2 billion U.S. settlement over the mortgage securities that soured in the 2008 financial crisis, giving it breathing space to refine its strategy.

According to analysts, Deutsche Bank may see its asset management arm, which includes its mainstay DWS retail asset management brand, valued at 8 billion euros ($8.6 billion) in a potential IPO.

The unit posted a 7 percent rise in pretax profit to 549 million euros in the first nine months of 2016, accounting for almost a third of the group's pretax profit of 1.6 billion euros.

It had 715 billion euros in assets under management as of September 2016.

Deutsche Bank investors have said in the past that they would prefer a partial sale of the asset management unit over a rights issue, cautioning that such a move would reduce the steady flow of earnings from the business.

The asset management unit has been touted as a potential divestment target at various times in the past. However, Deutsche Bank has always said that it would not shed the business.

Never say never on capital hike: Deutsche Bank CEO

Chief Executive John Cryan told CNBC last week at the gathering of policymakers and business executives in Davos that asset management remained "absolutely core."

"People forget how big it is and it's a very lovely steady stream of predictable profits and revenues for us, so we like it very much, so well keep that," he said last week.

Deutsche's capital plans will also determine whether Deutsche Bank will reintegrate its retail unit Postbank, which it had put up for sale to lift its capital ratios, but would prefer to keep, people close to the bank said last week.

Deutsche Bank has drastically cut its 2016 staff bonuses.

Raising capital, however, is not Deutsche Bank's base case plan, Cryan indicated last week.

"Our strong preference was not to raise fresh capital... but I know never to say never," he said in Davos.

Separately, Deutsche Bank is expected to outline a slimming down of its core investment banking unit as part of its strategic review after a rapid expansion in the business since the 1990s.