Deutsche Bank hopes to bring more revenue streams from business management as they look forward to 2021. The German financial institution is currently planning to hire over 300 investment and relationship managers for the wealth management division over two years in hopes of strengthening its position in market and business analysis.
Deutsche Bank plans to compensate for the massive hiring by cutting jobs in the investment bank division, which remains unable to generate sustainable revenue and profit for the bank since the financial crisis in 2008. The major restructure applied by the German lender will lead to termination and lay-offs by the thousands, which will most likely affect areas such as equities trading.
Christian Sewing, Chief Executive for Deutsche Bank, shares that the company plans to use more resources in divisions that can generate more stable profits like wealth management. Deutsche Bank Wealth Management Global Head Fabrizio Campelli reveals that business growth is what the company depends on to drive them into a massive investment push. The German bank plans to send over 300 investment and relationship managers all over the world to observe the development in the regions of Europe, America, and Emerging Markets.
Campelli reveals that Deutsche Bank needs to work to increase client footprint. Banks and other financial institutions are drawn to wealth management since it requires lesser capital, and the profits and earnings from it do not have a fixed amount. However, wealth management can be a competitive field. The big players like Credit Suisse and UBS have wealth management as the foundation of their business structure. Upstart financial technology companies, meanwhile, are hoping to make inroads to the lucrative style of business. Campelli believes that wealth management is a crowded market because most banks in the world wish to make themselves known in the sector.
However, Campelli believes that Deutsche Bank wealth management can find their spot in the market by making it relevant and targeting suitable investments. Campelli also emphasizes that Deutsche Bank plans to focus on trending growth, such as entrepreneurial wealth and family offices. Campelli also includes the rising net worth of millennials, a generation which handles their finances differently compared to other generations. The global head for Deutsche Bank wealth management reveals that the company is willing to use several hundred million euros to fund the overall investment on growth.
Deutsche Bank currently sits outside of the top ten in the private banking league race despite earning over 213 billion euros during the first quarter of 2019. The amount is under the assets under management from their wealth business division and rose by 14 billion euros from last year’s figures. Deutsche Bank is trailing its rivals from the Swiss and the US. Campelli reveals that the German bank has an AUM target for the future that will hopefully crack the top ten rankings. Campelli shares that he will feel disappointed if Deutsche Bank will not go higher than its current position within the next two years.
Deutsche Bank got a total of 2.5 billion euros from all aspects of their company in 2019. Wealth management is responsible for 17% of the total after bringing home over 427 million euros in first quarter revenues. The German Bank is already beginning its hiring process for the wealth management division. Some of the notable hirings include Marco Pagliara, who will take over the Northern and Eastern European area after moving away from Goldman Sachs, and Michael Rogers, a former Merrill Lynch employee that will be the head of the US West Coast wealth management area.
Campelli believes that Deutsche Bank’s investment bank struggles are a way to let people know that they are trying to build a stable business, which will hopefully attract talent for wealth management.