As the conversation around a possible merger between Deutsche Bank and Commerzbank evolves, finews.asia asks what might change for Germany's biggest lender in Asia.
«There seems to be an inevitability about it,» says a source at the bank, referring to a merger between Deutsche Bank and Commerzbank. The pros and cons of the deal have been debated endlessly across global headlines, but very little has been divulged about the impact it may have on Deutsche Bank’s operations in Asia.
Here, a variety of stakeholders – external and internal – shed some light. «The only market where [the deal] is going to make a significant difference is the home market,» a private banker in Singapore says.
Political Headwinds
«It's business as usual in Asia,» agrees a senior banker also in the region who says colleagues and clients are more concerned about global macros, especially political headwinds, than they are about corporate developments at Deutsche Bank.
An executive at a South Asian family office with a presence in London’s St. James says, «The only material thing [for us] is balance sheet» and by his account, Deutsche Bank is quite generous in extending its balance sheet to clients. «We have no balance sheet constraints at the moment,» confirms the source.
Down to Size
«Unless Deutsche Bank funds this acquisition in a particularly obtuse manner, there would be no impact on its willingness to lend and the cost at which it may do,» agrees an industry observer at a rival European bank.
While a deal «is clearly not being driven from a wealth management perspective,» says the source at the bank, he is unequivocal about the division’s importance to the bank. «We are very clear wealth management is a business Deutsche Bank should be in,» he says, echoing CEO Christian Sewing’s assertions in several public fora over the last six months as he tries to cut its securities division down to size.
Outperforming Larger Rivals
With a little over $230 billion in assets under management (AUM), the wealth management is not the biggest revenue-generator for the bank, but it is a revenue-accretive business for the bank in a year when net revenues were down 2 percent.
In Asia, the bank has a little over $56 billion in assets according to Hong Kong-based «Asian Private Banker». Much has been written about a decline in Deutsche’s AUMs in the region, but data in the league table suggests the 4.6 percent fall is in line with the industry average of 3.7 percent for international private banks in Asia. Indeed Deutsche Bank may have outperformed larger rivals like UBS and BNP Paribas – the industry leader suffered a 6.7 percent contraction in assets, for the French lender it was 8.2 percent.
«Wealth management continues to be one of three pillars that the business rests on,» says the source at the bank who says this is reiterated on a constant basis in the way leaders assign both responsibility and resources at the bank.
Advance Not Retreat
«Lok Yim, head of Asia, Middle East and Africa (pictured above), is always interested in candidates and that hasn’t changed,» says one search consultant in the region who is not currently mandated by the bank. «No, not yet,» he says when asked if these candidates have any reservations regarding the implications of a merger with Commerzbank on their future role at the bank.
Quite Strategic
Yim made headlines when he hired as many as 50 bankers in 2017 and has been relentless in his pursuit of them since. «They are quite strategic in how they look at new hires,» says one banker on Dubai who was made an offer by the bank.
«Senior bankers who would be able to hit the ground running,» is what he says the bank is after, which would imply that the headcount expansion virtually pays for itself within s relatively short span of time. In the past year, Deutsche Wealth Management has attracted top talent from the likes of J.P. Morgan, HSBC Private Bank and Credit Suisse, among others.
