Deutsche Bank Revisits Asset Management Unit

Deutsche Bank, asset management, IPO, partial listing, John Cryan

Deutsche Bank may seek a partial listing of its asset-management division, in a bid to bolster its depleted capital, according to a report. The German bank had denied such a move last month.

The Frankfurt-based lender Deutsche Bank has not made a final decision about the potential float of a minority stake in its asset management unit, which wouldn't likely happen before the first half of 2017, the «Financial Times» reported on Friday.

The unit is a gem in Deutsche's crown, performing far more steadily and profitably than its investment bank or retail divisions. Asset management, with 719 billion euros under management, is estimated to be worth roughly 8 billion euros.

A partial floatation would reverse an avowal from John Cryan, CEO of Deutsche Bank, who last month said it is an «essential part» of the bank.

No Choice

The timing of the report coincides with Cryan's current struggle to reach a billion-dollar settlement with U.S. justice authorities over how Deutsche sold mortgage securities in the run-up to the financial crisis.

The uncertainty surrounding the settlement has pushed the bank's shares below 10 euros, while demand for credit default swaps on Deutsche – or insurance policies against its default – have surged in recent weeks. 

Unthinkable – Until Now

Taken together with Deutsche's puny capital cushion, this means that Cryan, a former financial institutions banker for S.G Warburg and later UBS, probably has little choice but to revisit previously unthinkable options, such as offloading part or all of Deutsche's lucrative asset management unit.

The «FT» reported that floating a minority stake could bring in 2 to 3 billion euros in badly needed proceeds to put towards capital. Deutsche would retain effective control with a majority stake, but would take in a smaller share of future profits.

Hedge fund players have urged Cryan to consider selling the unit, the «FT» reported. 

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