Deutsche Bank Asia Wealth Unit Targets 20% Revenue GainSanat Vallikappen
Deutsche Bank AG’s Asia-Pacific wealth-management business aims to increase revenue by 20 percent in 2015 by targeting the region’s richest people.
The bank will seek new clients and try to lure money from existing customers as it focuses on individuals with at least $100 million of potential investable assets, said Mark Smallwood, Deutsche Asset & Wealth Management’s head of franchise development and strategic initiatives in the region. It will focus on Singaporeans, Hong Kongers, Indonesians, Chinese and non-resident Indians, he said.
“The way we’ve played the game is to be extremely focused on our strengths, and our strength is the ultra-high net-worth space,” Smallwood said by phone from Hong Kong last week. He was commenting directly on the private-banking business of his unit, which also oversees asset-management operations such as mutual funds. He declined to disclose current client numbers.
Deutsche Bank, which manages about $97 billion at its Asia-Pacific asset and wealth-management unit, is among banks vying to tap the region’s growing ranks of rich individuals. The number of Asia-Pacific millionaires, which grew 17 percent last year, is expected to surpass North America by the end of 2014, Cap Gemini SA and Royal Bank of Canada said in a report this month.
Smallwood, 52, said the Frankfurt-based lender will woo Asia’s mega-rich by offering structured-finance products, hedging solutions and alternative investments such as private equity and infrastructure. The Asian wealth business’s revenue has quadrupled in the past five years, he said, declining to disclose last year’s growth.
Assets at Asia’s top 20 wealth managers grew 12 percent to $1.36 trillion in 2013 from a year earlier, according to an Asian Private Banker study released Oct. 14. UBS AG’s $245 billion was the region’s largest total, while Citigroup Inc. was second with $218 billion. Deutsche Bank was fifth.
The ultra-high net-worth segment offers the highest revenue contributions and a perceived differentiation from other banks, according to Pathik Gupta, director and head of Scorpio Partnership for Asia.
“All the private banks with strong growth ambitions in Asia have invariably some form of ultra-high net-worth strategy,” Gupta wrote in an e-mail. His firm is a London-based consultancy for the wealth-management industry.
Deutsche Bank’s focus on the ultra-wealthy segment comes amid a push from the lender to expand asset and wealth management, which were combined into one unit in 2012 under Michele Faissola. That division accounted for 14 percent of Deutsche Bank’s revenue last year, up from 13 percent in 2012, data compiled by Bloomberg show.
The unit managed about 955 billion euros ($1.2 trillion) globally at the end of June, with the Asia Pacific accounting for 8 percent of the total, according to data on the division’s website. The firm had 185 private bankers in the Asia-Pacific region, Smallwood said.
Deutsche Bank outsourced its back-office functions for wealth management in Singapore last month, enabling the firm to handle greater client volumes, Smallwood said.
Once the technology outsourcing takes effect in the first half of 2015, the bank will be able to broaden its strategy to focus on the high net-worth bracket of individuals with $2 million to $25 million of assets, he said.
Last year, Deutsche Bank moved its wealth management back-office processes in Switzerland to Avaloq Licence AG in a bid to cut costs. In Singapore, as many as 70 Deutsche Bank employees moved to Avaloq, Smallwood said.
To manage a large number of accounts, “you’ve got to have a very robust platform from a technology point of view to remain at an efficient cost-income ratio,” Smallwood said.
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