By Jan-Henrik Foerster
Deutsche Bank AG is targeting the Middle East as a priority region for wealth management as the lender seeks to recoup assets lost late last year when concerns about its capital levels prompted an exodus of clients.
The Frankfurt-based bank is seeking to hire relationship managers and expand the products it offers wealthy clients in the region to attract new money, Peter Hinder, head of wealth management for Europe, the Middle East and Africa and the lender’s Switzerland head, said in an interview in Zurich. He said he plans to hire about 20 private bankers for EMEA, though he declined to give a more precise geographical breakdown for the Middle East.
“We have a clear growth agenda for EMEA and Middle East is our number one priority,” Hinder said. “There will be more capital flowing into the region as Saudi Arabia is opening up,” he said, adding that the economic reforms being undertaken by the country present “incredible potential” for the bank.
The wealth-management unit’s invested assets plunged 26 percent in the fourth quarter to 216 billion euros ($247 billion) as clients withdrew funds and investors questioned the bank’s ability to withstand billions of dollars in fines. Net asset flow at the unit turned positive in the first quarter and the bank has said it plans to hire about 100 private bankers over the next 18 months across Asia, Europe and the U.S. The 20 private bankers Hinder mentioned are part of that 100.
Deutsche Bank didn’t have “much choice” but to invest in the business, said Piers Brown, an analyst at Macquarie Bank Ltd. who has an outperform rating on the stock. “I don’t think wealth management is a main priority at the moment for Deutsche, but it’s reasonable to put some additional resources into that business to increase revenues and improve cost to income ratios.”
While Deutsche Bank’s recent strategy revamp emphasized corporate banking, the lender is also following rivals in seeking to reap the rewards from steadier wealth management, which can also be used to offer investment-banking services to the rich. The bank currently employs about a dozen private bankers in Saudi Arabia, Hinder said, and 80 in total.
Deutsche Bank, which also offers investment banking in Saudi Arabia, is among global banks going into the kingdom in preparation for an expected fee bonanza and wealth creation. The kingdom is becoming more attractive to foreign lenders as it overhauls its economy and plans to list Saudi Arabian Oil Co. in what could be the largest-ever initial public offering.
Only a handful of international banks, such as JPMorgan Chase & Co., Deutsche Bank and BNP Paribas SA, have licenses to open branches in the kingdom. HSBC Holdings Plc, Royal Bank of Scotland Group Plc and Credit Agricole SA operate in the country through minority stakes in local lenders.
Credit Suisse Group AG, the Swiss wealth manager that has been prioritizing wealth management over investment banking, also sought a license in the kingdom, its head of international wealth management Iqbal Khan has said.
“You’re hearing from many competitors how they are trying to get a foothold in the region and Saudi Arabia,” said Hinder, who oversees 56 billion euros at his unit. “We have finalized the revamp of our platform last year and will now massively expand our product offering throughout the next year and hire relationship managers in the kingdom.”