Bloomberg News

Deutsche Bank Said to Pursue Sale of Asset Management Units

January 25, 2012

(Updates with details on business in eighth paragraph.)

Jan. 12 (Bloomberg) -- Deutsche Bank AG executives decided to pursue a sale of asset-management units after they were satisfied with early interest in the business, according to two people with knowledge of the matter.

More than two dozen bidders, including banks, private- equity firms and asset managers, handed in preliminary offers last week, said the people, who declined to be identified because talks are private. Some bidders valued all of the assets between 1.5 billion euros ($1.9 billion) and 2.5 billion euros, while others made offers for pieces of the business, the people said. A selected group of potential buyers will be asked to submit second-round bids in February, one person said.

Deutsche Bank, the biggest in Germany, announced a strategic review in November of its global asset management division, excluding operations of the DWS mutual fund unit in Germany, Europe and Asia. Chief Executive Officer Josef Ackermann, who’s leaving in May, built up the asset management and consumer banking units to temper the company’s reliance on investment banking.

Christian Streckert, a Deutsche Bank spokesman in Frankfurt, declined to comment. The company’s shares rose 2 percent to 28.51 euros, valuing the company at 27 billion euros.

Deutsche Bank’s management board opted for a sale at a meeting Jan. 10, though could still decide later in the process not to sell, one person said. The lender will likely give about 10 bidders access to the unit’s accounts, the person said.

RREEF, DWS

The German lender would prefer to sell the businesses as a whole, though it will also consider bids for parts, the person said. Among the assets for sale are the U.S. portion of DWS mutual funds; RREEF alternative investments such as real estate and infrastructure; DB Advisors, which works for pension and sovereign wealth funds and endowments; and Deutsche Insurance Asset Management for insurers.

The units hold less than 400 billion euros in assets under management, according to estimates from Dirk Becker, a Frankfurt-based analyst at Kepler Capital Markets.

Deutsche Bank’s entire asset management unit, including the DWS businesses being kept, reported nine-month pretax profit of 316 million euros, up 83 percent from the year-earlier period. Kevin Parker, head of asset management, cut costs and headcount by about a third between 2007 and 2010 while exiting businesses not considered strategically relevant to boost profit.

The German lender in November said the review “is focusing in particular on how recent regulatory changes and associated costs and changes in the competitive landscape are impacting the business.”

Europe’s top financial regulator is requiring the region’s banks to bolster their capital levels by mid-2012 to withstand losses on sovereign debt. Deutsche Bank needs to fill a capital gap of 3.2 billion euros after the results of a stress test by the European Banking Authority.

--With assistance from Zach Mider in New York. Editors: Jennifer Sondag, Edward Evans.

To contact the reporter on this story: Aaron Kirchfeld in Frankfurt at akirchfeld@bloomberg.net

To contact the editors responsible for this story: Frank Connelly at fconnelly@bloomberg.net; Edward Evans at eevans3@bloomberg.net.


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