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Deutsche Bank AG co-Chief Executive Officer Anshu Jain said he and his top bankers are meeting with super-rich clients as Germany's biggest bank fights to close the gap on the wealth units of UBS AG and Credit Suisse Group AG.
"We're hosting a dinner tonight," Jain told reporters in Frankfurt today. Ultra-wealthy clients "want to feel the confidence that they have access to the top management in any organisation they give their personal wealth to," he said.
Jain promoted Michele Faissola, one of his investment-banking lieutenants, last June to take on the Swiss banks in attracting the ultra-rich as the company seeks to boost earnings from its asset and wealth management unit. Deutsche Bank, which is eighth in a global ranking of wealth managers by assets, plans to increase the number of clients with at least ^30 million ($40 million) to invest by half by 2015 through offering cross-border deposits, hedge-fund placements, aircraft financing and other services.
"We have some world class, top-notch competitors," Jain said, adding that Deutsche Bank's location in Germany and its financial products help differentiate the firm.
The world's top 20 wealth managers are targeting super-rich and emerging-market clients as wealth is increasingly concentrated in the most affluent families and in faster-growing economies. Ultra-wealthy households will increase assets 55 per cent to $11.6 trillion by 2017, Boston Consulting Group said last month. Households with under $5 million will grow at "significantly lower rates," the Boston-based firm said.
Swiss rivals
UBS, Switzerland's biggest bank, has more than $1.5 trillion under management for rich clients. UBS has 45 per cent of assets outside the Americas from the ultra-wealthy, while Credit Suisse Group AG, the second-biggest Swiss manager, has 42 per cent.
The Zurich-based wealth managers are ranked No. 2 and No. 5 in the world by assets compared with Deutsche Bank's placing in eighth, according to a July study by Scorpio Partnership, a London-based research company. Both UBS and Credit Suisse are targeting super-rich customers with at least 50 million Swiss francs ($54 million) to invest to help improve pretax margins because the funds can be managed by fewer bankers compared with deposits from less affluent clients.
Deutsche Bank doesn't disclose details on the number of super-rich clients or the amount they have invested with the bank. The bank had ^297 billion under management for wealthy clients at the end of 2012.
Profit goal
Deutsche Bank can only reach a goal of generating an after-tax return on equity of 12 per cent or more by 2015 if the asset and wealth management and global transaction banking businesses double profit from 2011 levels, Jain told analysts in September in Frankfurt. The richest wealth clients bring "stable deposits," which will help the firm meet regulatory requirements for funding, Jain said today.
Faissola said yesterday that he's "more confident" about boosting pretax profit at his unit to about ^1.7 billion in 2015 from ^700 million last year. Attracting "hundreds" of super-rich clients is part of that plan, according to Dario Schiraldi, head of the unit's global client group.
Pretax profit at the asset and wealth management unit rose 6 per cent to ^221 million in the first quarter from a year earlier, company filings show. Client assets rose 5 percent to ^973 billion in the three months, helped by ^6 billion of net inflows after two years of customer withdrawals.
About 45 per cent of wealth-management clients are in Germany, with 14 per cent in the faster-growing Asia-Pacific region, the company said.
