German lender Deutsche Bank plans to become more effective in wealth management business segment because it believes it would bring in steadier revenue streams and has plans to recruit an additional 300 relationship and investment mangers for that business by 2021.
There is a major restructuring under way at Deutsche Bank and the company now has set a strategy to focus on the wealth management business segment and shift from the traditional investment bank business which has not been able to generate the levels of sustainable profits that it had hopes ever since the 2008 global financial crisis. It is expected that the restructuring would result in thousands of job cuts in areas like equities trading.
As an alternative strategy, the Chief executive of the bank Christian Sewing wants to lay focus on and deploy more resources to the business areas which he believes to become more stable streams of revenue streams and the wealth management business one of them.
“This drive to grow our business is now materializing with a big investment push,” Fabrizio Campelli, global head of Deutsche Bank Wealth Management told the media in an interview.
Globally, the bank plans to increase the number of relationship and investment managers by 300 which is one third of the total number currently, according to Campelli’s plan. The recruitments would take place all across America, Europe and the Emerging Markets regions.
“We need to increase significantly our client footprint, which means the net increase of client facing individuals needs to be material,” he said.
Since there is requirement of less capital and earnings tend to be less cyclical, therefore wealth management is attractive to banks. However this segment is also very competitive. The already existing leaders in the segment are Swiss banks UBS and Credit Suisse. Both these banks have wealth management as their core business. There are also a number of fintech startups that are attempting ot set foot and stabilize in this segment.
“The space is very crowded and the market is one that many banks have sought to make a mark on,” said Campelli, who has run the business at Deutsche since October 2015.
“We looked at trends we believe Deutsche Bank wealth management can be particularly relevant in and within those areas we are making some very targeted investments”.
The bank has been following a recent trend in the segment which is focused on rising wealth of entrepreneurs instead of the conventional family wealth, Campelli said. Additionally, this segment has also witnessed an increase in the number of family offices as well as the rise of millennial high net worth individuals who have a different way of wealth management compared to the wealthier people from previous generations.
Campelli however did not want to say anything about the overall size of the investment that would be required to fund this growth except for saying that it would be “several hundred million” euros.
(Adapted form Reuters.com)