Deutsche Bank has combined its Wealth Management and Private & Commercial Business International (PCBI) units into a new International Private Bank, with a client base of well over three million private, wealth and commercial clients, and assets of EUR250 billion and revenue of EUR3 billion.
Deutsche Bank has combined its Wealth Management and Private & Commercial Business International (PCBI) units into a new International Private Bank, with a client base of well over three million private, wealth and commercial clients, and assets of EUR250 billion and revenue of EUR3 billion.
Claudio de Sanctis, most recently Global Head of Wealth Management, will become Head of the International Private Bank and CEO EMEA.
Michael Morley, UK head of Wealth Management, is responsible for the UK and Nordic business for the International Private Bank, plus he is CEO of Deutsche’s UK authorised bank and licensed deposit taker.
He was brought in three years ago from his former role as head of Coutts, charged with building what he calls ‘a substantive position’ for Deutsche Bank in the UK private banking market.
“This is the end of the first stage of showing that there is a market for us and we can grow a business,” Morley says.
“You can now expect to see the pace moving faster and more senior hiring and an increasingly diversified geographical book of clients as we build out a global cross border international private banking business.”
Morley explains that the global wealth management business that Deutsche Bank had was focused on the ultra-high net worth market around the world, while the PCBI business had wealth advisers as well as retail and commercial banking businesses.
“When you put those two businesses together you get a business with a combined assets of EUR250 billion which is much bigger as far as assets are concerned and the liabilities of clients – it creates scale, adds to the global footprint and enables some rationalisation to take place as there is a cost saving in play there as well,” Morley says.
“It very much plays to the narrative that Deutsche Bank is keen to support its wealth management and private banking businesses around the world particularly with the added strength to European home markets.”
The biggest change that Morley has observed in the UK wealth market has occurred in the last 10 years since the Retail Distribution Review (RDR). “The biggest change that we have seen in the UK market has been a very decisive move over the last 10 years since RDR from organisations which predominantly arranged their businesses around product lines to offering advice on both sides of the balance sheet.
“They are now really understanding that if you are going to build businesses aligned with client needs, the starting point needs to be understanding and profiling clients properly.”
Morley observes that scale is a key advantage for Deutsche Bank. “If you are part of a large global organisation with a significant investment bank behind you, the ability to provide that advice and supply suitable products is enhanced,” he says. “It is one of the key advantages and strengths that Deutsche Bank has.
“In wealth management whatever the size of your operation you can be very successful with one man or one woman operations in the UK who act as independent financial advisers and have an interesting and profitable book of clients and equally if you are a large firm.
“Size is not the criteria – it is about understanding what your key target market is and what your strengths are and managing your business in an efficient manner.”
Scale is important, Morley says. “If you are exclusively focused on investment management, it is increasingly true that the product margin on that business has been in secular decline over the last few years.”
The Covid-19 pandemic which has dominated the first half of 2020 is another risk that needs managing, he says.
“I think that the main thing over this year and this crisis is that it is another risk to manage so you ask clients what is their preferred mixture in their long term plan and what is their attitude to risk.
“As we have gone through this crisis and started to come out of it, we have all understood that feeling safe depends on what your attitude to risk is – everyone is having that conversation in every business.”
The big issue that is constantly coming up in conversations with clients is climate change risk, Morley says.
“Clients do want to talk about climate change and expect the private banking firms to be able to explain to them what the sustainable and environmental footprint is of what they invest in.
“It’s a theme that people have been talking about more and more and lock down appears to have intensified that and made more acute many problems in the world that were already there.”
Morley comments that all boards of banks need to consider the risk and understand that climate change is a hot topic. “In terms of investment products there’s an expectation that you are investing sustainably and we think it’s the right thing to do,” he says.
“If you are running a bank you need to look at and understand how climate change affects every item on your balance sheet on the lending side as well as the asset side.”
