Deutsche Bank is reported to be working on a public listing of its asset management division to rebuild its capital buffers, according to sources cited by the Financial Times today.
The German lender has yet to make final decision about the potential float of a minority stake in its asset management unit and it is unlikely to occur before the first half of next year, say sources.
This latest move is one of several ideas being floated by Deutsche as it looks towards agreeing a multi-billion settlement with the DoJ for selling huge amounts of the residential mortgage-backed securities that turned out to be toxic and fuelled the 2008 financial crisis. CEO John Cryan, is expected to meet the DoJ today although it is not expected that a deal will be reached at this time.
Deutsche is said to have €719 billion of assets under management which is estimated by analysts to be worth around €8 billion.
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These have been troublesome times for the bank which has endured a tough time of late after news of the DoJ’s $14 billion settlement request sparked investor fears that the bank might be forced into raising capital or even require a government bailout.
Deutsche Bank indicated that neither is on its agenda and that it has no intention of settling for anywhere near $14 billion, as reported by Finance Magnates.
Cryan has urged employees to ignore rumours of disposals and commented: “There is one rumour in particular that I would like to dispel by making it unambiguously clear that Deutsche Asset Management is and will remain an essential part of our business model.”
Nevertheless, a public listing of a minority stake in the asset management unit would enable Deutsche Banks to keep management control while raising €2-€3 billion of capital that would reduce the size of a potential rights issue.
Hedge funds are reported to have persuaded the bank to consider selling the division but the outcome remains to be seen as one of the main drawbacks of the plan is that it would reduce the amount of profit from the business that Deutsche Bank would earn in future.