Deutsche Bank AG, the biggest German lender, has begun talks with suitors for its asset-management arm and may be open to a breakup of the division, said people with knowledge of the matter.
The bank, which said last week that it’s reviewing options for the business, may fetch less than $4 billion for the operations, said the people, who spoke on condition of anonymity because the talks are private. While Deutsche Bank (DBK) prefers to sell the division as a whole, the Frankfurt-based lender would also consider bids for parts of the unit, they said.
The move augurs a potential dismantling of a division that Deutsche Bank Chief Executive Officer Josef Ackermann built up over the last decade to help temper the company’s reliance on investment banking. The sale comes as Europe’s top financial regulator forces the region’s banks to bolster their capital levels by mid-2012 to withstand losses on sovereign debt.
“Deutsche Bank has been looking at the business for a long time and decided it’s not working,” said Dirk Becker, a Frankfurt-based analyst at Kepler Capital Markets. “This is an attractive business for someone specialized in asset management who has sufficient economies of scale.”
Among the assets for sale are the U.S. portion of DWS, formed in part from the acquisition of the Scudder funds from Zurich Financial Services AG (ZURN) in 2002. Also included in the review are the RREEF real-estate investment manager, and a division that helps insurance companies manage their investments.
Possible buyers for all or part of the assets may include New York Life Insurance Co., Invesco Ltd. (IVZ), Principal Financial Group Inc. (PFG) and Ameriprise Financial Inc. (AMP), Becker said. The units up for sale hold about 400 billion euros ($540 billion) in assets, which may value the business at 2 billion euros to 4 billion euros, he said.
The review, which excludes operations of the DWS mutual fund unit in Germany, Europe and Asia, will be conducted “thoroughly and carefully,” said Deutsche Bank spokesman Klaus Winker. He declined to comment on possible buyers. The lender won’t disclose the amount of assets managed by the units.
Deutsche Bank shares advanced 6.2 percent to 28.62 euros in Frankfurt trading. They have dropped 27 percent this year.
Representatives at New York Life, Invesco, Principal Financial, and Ameriprise declined to comment or didn’t immediately respond to calls seeking comment.
Deutsche Bank needs to fill an estimated capital gap of about 2.8 billion euros with earnings to exceed a 9 percent core tier 1 capital requirement by mid-2012, according to a presentation on Oct. 25. Deutsche Bank has said it doesn’t need to sell shares or take state aid and can cut risk-weighted assets and retain earnings.
“We’re seeing all big universal banks streamline operations and refocus their business on what they’re best at,” said Frank Braden, a London-based equity analyst at Standard & Poor’s, who has a “hold” rating on the stock. “It also goes in lockstep with solidifying the capital base without having to issue new shares.”